Media Release
March 31, 2014
North Queensland farmer confidence down as drought takes
hold
Results at a glance:
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Confidence among North Queensland farmers has dipped with 81 per cent expecting
similar or worsening conditions in 2014.
Cattle producers continue to be badly impacted by drought, while sugar producers are
also feeling the effects.
Investment intentions remain subdued and will only begin to improve after prolonged
rain.
Ongoing drought conditions – coupled with higher input costs – have taken
their toll on North Queensland farmer sentiment with the region’s confidence
levels significantly declining in the latest quarterly Rabobank Rural Confidence
Survey.
Beef producers continue to feel the effects of the dry weather, while the
region’s sugarcane growers are relying on irrigation in the key Burdekin area.
Completed earlier this month, Rabobank’s latest Rural Confidence Survey found 55
per cent of the region’s farmers expect conditions to worsen in the coming 12 months
- a significant rise from 17 per cent with that view last quarter, while just 17 per cent
expect conditions to improve in the coming 12 months (down from 25 per cent
previously). A total of 26 per cent expect conditions to remain the same.
A comprehensive monitor of the outlook and sentiment in Australian rural industries,
the Rabobank Rural Confidence Survey questions an average of 1000 primary
producers across a wide range of commodities and geographical areas throughout
Australia on a quarterly basis.
Rabobank regional manager North Queensland & Northern Territory Trent McIndoe
said the prolonged dry was taking its toll with much of the north-west of Queensland
now declared in drought.
“We had a disappointing wet season last year and it has been a similar story this
year with the monsoon season starting to come to a close and not a lot of good
weather in sight,” Mr McIndoe said.
“Cattle producers are doing it particularly tough at the moment with many entering
this dry season with only marginal feed supplies to get them through.”
Mr McIndoe said farmers had been forced to de-stock large numbers of cattle last
year, which had seen record yardings in many centres and a subsequent drop in
prices.
“This was compounded by the live export ban, which left many producers with
drought-affected cattle and unable to find an outlet for them on the domestic market,”
he said.
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Media Release
March 31, 2014
Mr McIndoe said that while a lift in beef prices would be triggered when droughtbreaking rains were received over the state, there also remained positive indicators
for the sector due to the increased demand for beef out of China and other emerging
Asian countries.
“The macro outlook remains positive for cattle producers and there’s good signs for
the live export trade to Indonesia this year,” he said.
While seasonal conditions were creating challenges for cattle producers, they were
was also having an impact on the region’s sugarcane growers.
“Hot and dry conditions and an early finish to the cane crushing season has put
pressure on the irrigation system in the Burdekin,” Mr McIndoe said. “With peak
demand running one to two months earlier than usual the system is really struggling
to keep up.
“At the time of the survey, Queensland growers were also concerned by the
downward shift in the international sugar price to a level nearing the cost of
production. While prices have since lifted to a more profitable level on the back of
production downgrades in Brazil, it is a reminder of how sensitive the market is to
global stocks.”
While many North Queensland farmers highlighted drought as a major factor in their
deteriorating confidence level, higher input costs experienced a greater change since
the last survey (65 per cent compared to 27 per cent previously).
Sugarcane growers were particularly concerned by their costs with 91 per cent
reporting costs had increased over the past year, which Mr McIndoe attributed to the
sensitive margins for sugar, which were eroded when prices fell earlier in the year,
coupled with the increase in electricity costs associated with prolonged irrigating.
In line with the declining confidence levels in the overall agricultural economy,
farmers expectations of the performance of their own business declined with 24 per
cent of farmers expecting their business performance to improve (down from 44 per
cent). However, more farmers expected conditions in their farm business to remain
about the same as last year (52 per cent compared to 37 per cent previously).
North Queensland farmers revised down their investment intentions with 43 per cent
looking to maintain their current level of investment over the coming year (down from
72 per cent previously) and only 13 per cent looking to increase investment, which
was stable compared to the previous survey results.
“Investment remains subdued particularly in the beef industry as farmers operate in
survival mode in these very tough conditions,” Mr McIndoe said. “Widespread
soaking rains are needed to lift prices and confidence and even then it will take some
time before this flows though to increased investment.”
The most robust study of its type in Australia, the Rabobank Rural Confidence
Survey has been conducted since 2000 by an independent research organisation.
The next results are scheduled for release in June 2014.
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Media Release
March 31, 2014
Rabobank Australia is a part of the international Rabobank Group, the world’s leading
specialist in food and agribusiness banking. Rabobank has more than 110 years’
experience providing customised banking and finance solutions to businesses
involved in all aspects of food and agribusiness. Rabobank is structured as a
cooperative and operates in 42 countries, servicing the needs of about 10 million
clients worldwide through a network of approximately 1600 offices and branches.
Rabobank Australia is one of the country's leading rural lenders and a significant
provider of business and corporate banking and financial services to the Australian
food and agribusiness sector. The bank has 61 branches throughout Australia.
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To arrange an interview with Rabobank regional manager North Queensland &
Northern Territory Trent McIndoe or for more information on Rabobank’s Rural
Confidence Survey, please contact:
Denise Shaw
Head of Media Relations
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Email:[email protected]
Grant Dowling
Media Relations
Rabobank Australia & New Zealand
Phone: 02 8115 4088 or 0432 292 863
Email: [email protected]
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