Tasmanian farmers buck national survey trend, taking optimistic outlook on year ahead

Survey Results at a glance:

• Tasmania is one of just two states to report an improvement in rural sentiment in the latest quarter.
  
• Strong commodity prices remain the main driver for farmers with an optimistic outlook, but commodity price worries are also hanging over those farmers expecting their economic prospects to worsen.
  
• Fewer farmers overall intend to increase investments in their farm businesses in the coming 12 months

“Tasmania had a good growing season across the board, despite the very wet start which delayed planting. As a result, harvest was still underway during this latest survey and continued into March,” Mr Whatling said.

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“It shaped up better than many feared, with the excessive wet spring evolving into a good summer, delivering a good body of feed. Although it did dry off eventually on the Midlands and east coast, on the whole, the feeling on the ground in Tasmania is really positive.

“As we head towards the autumn break, farmers here are very mindful of the forecast for La Nina to move back to El Nino, which will drive drier conditions on the east of Tasmania and wetter on the west.”

Tasmanian farmers who do anticipate conditions to worsen this year overwhelmingly listed falling commodity prices as the key reason (79 per cent), followed by overseas markets and economies (47 per cent) and rising interest rates (22 per cent).

The survey, completed last month, found the state’s sheep and dairy producers are mainly concerned with falling commodity prices, whereas the Tasmanian beef industry views commodity prices as a positive driver for confidence, with cattle prices remaining at historically-high levels, albeit having dropped from the peaks of early 2022.

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Mr Whatling put this in the context of the global drivers at play, especially for the dairy industry. “Dairy farmers have enjoyed exceptional milk prices in recent years, but we expect these strong levels to ease back from July 2023. This will be driven by global commodity prices, which have been lower despite Australia maintaining high prices on the back of increased supermarket prices and high domestic demand,” he said.
“On the flipside, fertiliser prices are also easing which will bring relief for the high-input dairy industry.

“However, labour continues to present challenges in Tasmania – especially in the dairy sector where appetite and opportunity for expansion is curtailed by labour availability.”

Rabobank regional manager for Southern Victoria and Tasmania Deborah Maskell-Davies said it was heartening to see the increase in optimism among Tasmanian farmers when all other parts of mainland Australia – apart from WA, which had enjoyed its second consecutive record harvest – had reported declining confidence levels.

“Nationally, a combination of easing commodity prices, along with rising interest rates and concerns about the prospect of a return to dry conditions has hung over the sector, so it is testament to both the resilience of Tasmanian farmers and the positive agricultural conditions here that the state’s rural confidence levels have climbed,” she said.

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Despite the increase in headline confidence levels, farmers investment intentions pulled back this quarter, with 22 per cent now looking to increase their investment in the year ahead, compared with 31 per cent last survey. Debt levels are also expected to decrease with 23 per cent of Tasmanian farmers intending to reduce their amount of farm business related debt, up from 10 per cent.

Mr Whatling attributes this to farmers’ concerns about interest rate hikes, compounded by expectations rates will continue to increase in the foreseeable future. “However, we haven’t seen this dampen demand for land in Tasmania, and it remains a sellers’ market with ongoing demand and strong prices for agricultural holdings,” he said.