Rain helps grain and livestock outlook

By Country News on October 26, 2016

Significant rainfall has buoyed the outlook for Victoria’s grain and livestock producers, but hasn’t been enough to offset the challenges facing the dairy sector.

The latest Rabobank Rural Confidence Survey has found the state’s rural sentiment failed to rally in the past quarter, despite very good seasonal conditions, with dairy sector concerns keeping a lid on overall confidence levels.

The quarterly survey — completed in August — saw the net Rural Confidence indicator for Victoria remain around neutral levels, with 29 per cent of the state’s farmers expecting the agricultural economy to improve in the next 12 months (up marginally from 25 per cent), while 26 per cent expect conditions to worsen (from 24 per cent).

A total of 44 per cent were expecting conditions in the agricultural economy to remain similar to the previous year.

Rabobank’s Victoria manager Hamish McAlpin said while much-needed rainfall had “set up grain and livestock producers for a great season after last year’s failed spring”, it wasn’t enough to offset significant revenue concerns in the dairy sector.

“The state’s dairy farmers are under no illusion and realise this season is extremely challenging,” he said.

“Global markets have been low for some time and while we expect some recovery in the first half of next year, this will likely not flow through until the following season.”

Mr McAlpin said while it would take some time for an improvement to be seen in farm gate milk prices, cost pressures had thankfully eased, with fertiliser prices around decade lows and grain also at lower levels not seen in recent years.

“The good start to the season will also reduce the dairy sector’s reliance on buying in feed with expectation of increased levels of home-grown feed,” he said.

With market prices also lacklustre in the grains sector, Mr McAlpin said pricing concerns for grain growers were eclipsed by the prospect of good yields.

“After a poor season last year, this year’s wheat crop is shaping up to be around 40 per cent higher than last season, with farmers across the state expecting average to above-average yields,” he said.

“Fears of low water allocations this season have now been alleviated, with expectations that allocations will be at 100 per cent earlier than previously forecast, which gives enormous comfort to those in the irrigation sector.”

Rain had also filled on-farm water storages and set graziers up for a fantastic spring, Mr McAlpin said, with sentiment further boosted by strong market prices for beef, lamb and wool.

The impact of improved seasonal conditions on Victorian farmer sentiment was pronounced in the survey, with 66 per cent of those expecting the agricultural economy to improve in the next 12 months, citing the season as cause for their optimism, up from 62 per cent.

Milk price woes in the dairy sector saw commodity prices remain the dominant concern for farmers in the state, with 82 per cent of those expecting conditions to worsen, citing prices as the reason for their subdued outlook, up from 59 per cent.

By Country News on October 26, 2016

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