Federated Farmers: 'Fear factor' on the farm

Federated Farmers vice-president Andrew Hoggard.

Pessimism about the economic outlook was a sour note among the otherwise generally positive indicators in Federated Farmers' 19th bi-annual farm confidence survey, according to vice-president Andrew Hoggard.

For the first time farmer optimism had increased in all areas, except continuing negative perceptions of the economy.

"We should take heart that perceptions of farm profitability, production and spending have become more positive, and that farm debt levels have dropped slightly since the January survey," Mr Hoggard said.

"The concern is that when asked how they feel general economic conditions will fare over the next 12 months, nearly half of the more than 1100 farmers who responded expected conditions would worsen.

That's the lowest level of confidence since July 2012, and a five-fold increase in pessimism in the last 12 months.

"There seems to be a fear factor at play here. Farmers are feeling very uncertain about what the coalition government will do next on key issues such as water regulations, climate change and industrial relations."

Expectations for farm profitability over the next 12 months were up slightly, 30 per cent of respondents anticipating an improvement and 48 per cent expecting profits to remain stable.

Dairy and arable farmers were noticeably more optimistic than they were in January, but meat and wool farmers are markedly less so, reflecting a concern that the past season's excellent farmgate prices might not be sustained this season.

Regulation and compliance costs remained number one in respondents' greatest concerns (down from 21 per cent to 18 per cent). Heightened concern about pests, diseases and biosecurity (up seven per cent to 12 per cent) was thought to be driven by stress and uncertainty caused eradicating Mycoplasma bovis.

"Climate change policy and the ETS is number three, up three per cent to 10 per cent. That reflects farmer uncertainty over the government's more ambitious approach to reducing greenhouse gas emissions, and concern that agricultural biological emissions may be included in the ETS even though there are, as yet, no significant mitigating actions farmers can put in place," Mr Hoggard said.