Despite extraordinary strength in farm balance sheets and the overall health of the sector following more than two years of high rainfall and exceptional commodity prices, more farmers now believe conditions are set to worsen over the year ahead rather than improve.
Results from the third quarter Rabobank Rural survey reveal it's the first time rural confidence nationally has moved into ‘negative' territory since December 2019, with more farmers taking a pessimistic than optimistic view of the year ahead.
This can be attributed to the mounting cost of farm inputs like fuel, fertiliser, energy and building materials, as well as concern commodity prices are set to fall and a heightened threat of FMD.
Optimism is strongest among cotton, dairy, sugar and grain producers, while mixed livestock producers were the most pessimistic group of those surveyed.
The latest survey, completed last month, found just 14 per cent of farmers nationally expect agribusiness conditions to improve on last year, down from 28 per cent in last quarter, while 43 per cent expect current conditions to continue (previously was 52 per cent).
The number expecting business conditions to deteriorate has risen to 36 per cent, from 16 per cent in June.
Of those expecting conditions to worsen, 44 per cent cited the rising cost of input prices, 40 per cent blamed concerns about falling commodity prices while 39 per cent said the threat of FMD had influenced their sentiment.
Rabobank Australia chief executive officer, Peter Knoblanche, said with several uncertainties facing the Australian farm sector over the coming months, levels of farm sector investment were still encouraging, albeit down on last quarter, demonstrating a longer-term optimism in agriculture.
"The latest survey reveals 25 per cent of farmers nationally are looking to further increase investment in their farm businesses (although this was down from 40 per cent at the start of the year).
"A further 60 per cent also plan to maintain current levels of investment, which is a positive sign," Knoblanche said.
