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Rabobank’s latest Rural Confidence Survey has found that a third of farmers intend to increase on-farm investment in the coming year, while 55 per cent intend to maintain current spending levels. Just 10 per cent expect to reduce investment.
Conducted last month by rural and agribusiness bank, Rabobank, the survey found that infrastructure, technology, and machinery remain the top investment priorities for farmers.
The Q4 survey has found that although overall net confidence slipped slightly from the previous quarter (due mainly to business cost concerns and weather uncertainty), farmers are finishing the year on steady ground.
Nearly half of farmers (48 per cent) surveyed said they believe conditions will remain stable in the year ahead, while a further 27 per cent expect conditions to improve in 2026.
Net national rural confidence is now at 6 per cent, declining from 14 per cent in the previous quarter.
Rabobank group executive for country banking Australia, Marcel van Doremaele, said farmers were ending the year in a comparatively solid position after a difficult period.
“After a period of volatility – especially from a seasonal perspective – farmers are shifting their expectations towards greater stability in 2026, with nearly half anticipating it will be ‘business as usual’ in the year ahead,” he said.
“Despite some decline seen in the net national confidence index this quarter, the underlying sentiment remains resilient, with most farmers taking a measured view and balancing challenges with opportunities.”
Investment intentions and income expectations
Despite the softer overall confidence reading, investment appetite has continued to strengthen across the sector to its highest level since June 2022.
A total of 63 per cent of respondents intend to invest in on-farm infrastructure, including fences, yards, and silos, while over a third of Australian farmers intend to spend on new technologies (39 per cent) and new plant and machinery (35 per cent).
Plans to increase livestock numbers remain firm at 29 per cent, and investment in irrigation or water infrastructure held steady at 23 per cent.
Appetite for purchasing farmland has remained stable, with 16 per cent of farmers across the nation looking to expand their holdings.
However, concerns are rising about the future cost of lending.
“While earlier expectations pointed toward interest rate cuts, the latest indicators suggest a more cautious approach from the Reserve Bank of Australia to combat inflation – as we’ve recently seen with the December announcement to hold the official cash rate steady,” van Doremaele said.
Income expectations for the coming year have remained largely positive, with 41 per cent of farmers expecting their gross farm income to rise over the next 12 months (the same as the last quarter) and 38 per cent expecting it to hold steady.
Input costs remain the dominant concern
High input costs continue to weigh the most heavily on farmer sentiment, cited by 37 per cent of respondents and topping the list of concerns across every state and commodity group.
“Farmers are facing sustained inflation across almost every major input cost, and that pressure is naturally weighing on sentiment,” van Doremaele said.
“It’s no longer just fuel and fertiliser – everything from machinery repairs to labour and insurance is tightening margins, and when markets soften, such as wheat and cotton, those rising costs become even harder to absorb.”
Drought concerns are still a worry for 33 per cent, government policy for 31 per cent, overseas economic conditions for 19 per cent, and falling commodity prices for 24 per cent.
On the other side, farmers overall have remained positive about commodity prices, which continues to be the leading source of optimism, with 50 per cent saying that they will drive positive conditions.
Seasonal conditions were considered a positive factor for 46 per cent of farmers (down from 49 per cent last quarter).
State confidence diverges
The survey has shown that confidence levels vary widely across the country.
Tasmanian farmers have continued to be the most confident nationally, with only 5 per cent expecting conditions to deteriorate.
In contrast, sentiment has softened in NSW, Queensland, and Western Australia, reflecting regional seasonal variability and cost pressures, despite strong harvest outcomes in parts of Western Australia.
Farmers in Victoria recorded another lift in sentiment, rising to a net index of 24 per cent (its strongest reading since 2021), supported by improved seasonal conditions and a firmer commodity price outlook.
[Related: Agribusiness hits record lending milestone]