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Australia Grain Farmers See Improved Prospects

Rain, lower input costs, a weaker Australian dollar and reduced interest rates have made Australia’s grain farmers more confident about prospects for the next 12 months as they prepare to plant winter crops such as wheat.

But for all farmers, confidence fell to a two-year low in the March quarter on worries about global markets and softening commodity prices, according to a quarterly rural confidence survey released by Dutch agribusiness bank Rabobank.

This showed that 43 per cent of grain growers expected their farms to improve performance in the next 12 months, helped by better growing conditions and lower costs, compared with 34 per cent in a survey conducted in December.

“There’s been rain in quite a few parts of Australia and that’s helped build some confidence and that’s being helped by lower input costs for things such as fuel and interest rates,” said Peter Knoblanche, Rabobank general manager rural Australia.

He said al though wheat prices had eased in U. S. dollar terms since December, Australian prices had held up because of a weaker Australian dollar.

Knoblanche said farmers in some parts of the country, such as the grain belt that runs from northern New South Wales state to Queensland state in eastern Australia, were likely to plant big crops, after receiving good summer rains.

“Some parts of Australia such as around northern New South Wales have good soil moisture and will go ahead with crops but southern parts of New South Wales and Victoria (state) have had a terrible summer,” he said.

Wheat crops are planted in the April to June period and harvested from October through to December.

Western Aust ral ia, the country’s top exporting state, relies more on rain during the growing season as the state’s sandy soils don’t retain subsoil moisture.

In recent years, Western Australia has produced consistently big crops, including the third-largest crop on record in 2008-10 when the state harvested 12.3 million tonnes of grain, including 8.9 million tonnes of wheat, most of which will be exported.

“At this stage they’re set up for another good year of production provided that there is rain,” said Knoblanche.

Australia’s total wheat crop in 2008-09 was 21.4 million tonnes.

But sentiment worsened in sectors including the beef, wool and dairy industries.

The quarterly survey found that 48 per cent of Australia’s farmers expected overall conditions to worsen in the coming year, compared with 39 per cent in the previous quarter, although when asked about their own farm the percentage expecting deteriorating conditions fell to 31 per cent.

It was the fourth successive quarterly decline, with only 16 per cent of the 1,200 farmers surveyed across sectors expecting overall conditions to improve, down from 23 per cent in the December survey.

“It appears that what is driving this fall in confidence is worry about the potential impact of the global financial crisis over the next 12 months,” said Knoblanche.

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