Archive media release
9 August 2007
No drought of optimism for Australian farmers: Index
Australian farmers have recorded their highest confidence levels this year, according to the latest quarterly Westpac & Charles Sturt University (CSU) Agribusiness Index. Seventy-five per cent of farmers are now optimistic about the year ahead - the highest result since the Index began in February.
Leading the way was the Queensland beef industry, which according to Westpac Senior Agribusiness Economist, Justin Smirk, has benefited from early rains.
"It is also encouraging that farmers across Australia have had such a sharp rise in confidence, with a record 75 per cent now optimistic about the year ahead compared to 68 per cent when the Westpac & CSU Index commenced in February," Mr Smirk said.
"Commodity prices are still near record highs, suggesting that there are genuine reasons for producers' optimism but it will likely take a year before the full impact of changes in weather conditions is realised."
While confidence levels are high, Mr Smirk said the full results show farmers are still behaving prudently despite recent rains.
"Farmers are acting very cautiously despite the significant increase in confidence when looking to the year ahead. The patchy national rainfall thus far has not been reliable and we are still not seeing upturns in investment or employment figures," he said.
The Westpac & CSU Index produces an Economic Performance Index (EPI) between -1 and 1 based on the average of results.
Key June quarter state and territory results include:
- Western Australia recorded a negative EPI of -0.07, showing an improvement from -0.19 when the Westpac & CSU Index commenced in February. Producers reported declines in employment and cost pressures. South Eastern region recorded one of Australia's highest EPIs of 0.13. 72 per cent of agribusiness owners are confident about 2007-2008.
- Cyclone-devastated North Queensland regions have put the worst behind them with mostly positive June quarter EPIs. The EPI was -0.04, the second strongest state after Tasmania. 74 per cent of agribusiness operators are enthusiastic about the year ahead.
- While still the strongest state, Tasmania's EPI declined to -0.03. 72 per cent of agribusinesses are still confident for the year ahead. Farmers blamed their sluggish performance on increased fodder and other operating costs.
- New South Wales' EPI deteriorated to -0.13 in the June quarter, largely the result of declining capital expenditure and employment. New South Wales agribusiness owners were Australia's most optimistic with 82 per cent of operators confident about the next 12 months.
- Early June floods devastated Victoria's Gippsland region. Victoria joined New South Wales as the most under-performing states, with an EPI of -0.13, although an improvement from -0.21 when the Westpac & CSU Index commenced in February. 76 per cent of Victorian farmers are confident about the year ahead, with outlooks suggesting improvement.
- South Australia's high March quarter confidence has encouraged improvement to an EPI of -0.12 compared to -0.22 when the Westpac & CSU Index commenced in February. Indications are for a move into positive territory in the September quarter. 74 per cent remain confident about the next 12 months.
Graham Jennings, Westpac's General Manager, Regional and Agribusiness Banking, said wide-spread rains during early June had clearly influenced the optimism expressed in the June quarter results.
"The anecdotal stories the Western Research Institute collected showed the strength of character of agribusiness operators regarding the challenges and developments they are facing at this time," Mr Jennings said.
"We've seen everything from, Queensland producers astonished by heavy rains in early winter, to farmers in North Western New South Wales vowing to stay put despite lingering weather uncertainties.
"These same farmers are employing any tactics they can to remain viable and are even undergoing the unusual process of sending stock westward for agistment to capitalise on their western neighbours' better weather conditions.
"The breadth of responses and insights into the Agribusiness sector is the real strength of the Westpac & CSU Index. I'm looking forward to seeing how this plays out in the September quarter results."
With more than 450 staff in Regional and Agribusiness banking across Australia, including 150 experienced Agribusiness specialists who are passionate about their work, Westpac is committed to delivering the right long and short term solutions for its rural and regional customers.
For more information on Westpac's products and services for agribusiness owners talk to your local Westpac Agribusiness Banker or call 1300 134 979.
The September 2007 quarter Westpac & CSU Agribusiness Index will be released in October.
