Sentiment in South Australia’s rural sector took a hit this quarter as per Rabobank’s recent Rural Confidence Survey, as farmers navigate elevated prices for essential inputs in the wake of tensions in the Middle East.
These short-term operational challenges were offset by longer-term confidence in the outlook for the sector, with an overall strengthened appetite among farmers to invest in their businesses in the year ahead.
The latest quarterly Rabobank Rural Confidence Survey, released 16 June, found a nation-wide decline in farm sector sentiment on the back of widespread concerns about cost and availability of fuel and fertiliser since the outbreak of the Iran conflict.
The survey questions an average of 700 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.
In South Australia, this played out with the state’s rural confidence index falling into ‘negative’ territory, with more farmers negative than positive about the year ahead, for the first time since October 2024.
At the time of the survey, which aligned with unprecedented supply chain disruptions in the Strait of Hormuz and the knock-on effect to Australian farming businesses, more than half of SA farmers had a negative outlook on farm business conditions in the year ahead (56 per cent, up from 21 per cent in the previous).
Only 17 per cent anticipated a turnaround for the better (down from 28 per cent with that view previously), while those who believed conditions would remain stable halved to 23 per cent (from 46 per cent).
The survey, completed last month, was dominated by concerns about rising input costs, with 68 per cent of SA farmers reporting they were worried about elevated prices for fuel, fertiliser and other farm inputs (up from 51 per cent in quarter one).
Rabobank state manager for South Australia Peter Evans said the timing of the survey had aligned with complex on-farm and industry factors, and he was pleased to see “on-ground sentiment” had since improved with beneficial seasonal conditions and input price relief.
“There is always uncertainty at seeding time as farmers look to the sky, but the added layer of supply chain risks and elevated costs of key inputs compounded concerns this year,” he said.
“However, in recent weeks since I was appointed to the role, I’ve travelled across SA where I’ve had the opportunity to see how farmers are adapting their management strategies in response to input price and availability challenges.
“There has since been useful, widespread rain which has really turned confidence around. For example, I recently met with farmers on the Eyre Peninsula , which was the region with the lowest confidence level in the latest survey, and they are now more optimistic about how the season will shape up.
“It’s a similar story across the Yorke Peninsula and Mid North, although areas of the Limestone Coast have missed out to some extent.”
An emerging concern about ‘energy security’ reported in the survey (for 31 per cent, up from three per cent last quarter) also reflected the elevated prices, and, for some regions, availability issues for fuel in the weeks following the outbreak of the conflict in Iran.
The latest survey found concerns had eased about poor seasonal conditions, with only one in five SA farmers surveyed nominating drought as a negative factor (down from 37 per cent with that concern in March).
Seasonal positivity was also reflected in the survey by the 30 per cent of SA farmers who expect good seasonal conditions to positively impact the agricultural economy over the next 12 months.
Commodity prices were a source of optimism among SA farmers, with fewer worried about falling prices (21 per cent, down from 34 per cent last) and more anticipating prices will have an upward trajectory over the next 12 months (59 per cent, from 40 per cent previously).
