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Grass looking greener as farmers' optimism climbs

Despite commodity prices taking a dip, farmers are more confident now than they were at the beginning of the year.

Despite commodity prices taking a dip, farmers are more confident now than they were at the beginning of the year: a new survey shows a bright outlook for farm productivity and profitability for the 12 months ahead.

Taken at the beginning of the 2011/12 season, the latest Federated Farmers Farm Confidence Survey shows a net 50.4 percent of farmers expect to increase production over the coming 12 months, up 25.6 points on January when weather conditions were a major concern for the sector.

Optimism about profitability was up for all industry groups, although the increase for dairy farmers was smaller than for meat, grain and fibre farmers. Nearly half of respondents expected to lift profits this year.

“Most farmers are looking on the bright side, both for the general economy and particularly, for their own farm businesses,” says Bruce Wills, Federated Farmers president.

“This is despite commodity prices coming off recent peaks and a dollar being at record highs against the greenback. Any gloss taken off returns seems to have been balanced against an outstanding spell of weather at the tail end of last season."

Although the dollar has continued to appreciate further since the survey was conducted, he says most farmers cite government spending and borrowing is the priority.

Another issue noted by 14.5 percent of farmers was climate change policy and the Emissions Trading Scheme, although this was lower than the 30.1 percent who cited it this time last year when the ETS was implemented.

Only 16.4 percent were expecting improvement in the general economy over the coming 12 months, up 11.6 points on January. Again, dairy farmers were less optimistic than those in other sectors.

A third expected to spend more, which Wills says is indicative both of confidence and concerns about increasing input costs. Meanwhile, 45.6 percent planned to reduce spending.

“I am particularly encouraged by the way debt retirement is prioritised along with productive investment on-farm,” says Wills.