Farmers' confidence has fallen to the lowest levels in more than a decade, as the drought destroys large parts of rural Australia.
The latest quarter of the Rabobank Rural Confidence Survey shows that the confidence level is the lowest level since 2006, during the devastating millennium drought.
More than half of the farmers surveyed had a pessimistic view of the coming twelve months.
About 56 percent of respondents expect economic conditions to deteriorate over the next 12 months, significantly more than 35 percent in the quarter of June.
Those expecting an improvement in circumstances dropped from 18 to 13 percent, while 25 percent expected similar conditions as last year, compared with 41 percent in the last quarter.
But the drought has little resilience in the sector, with farmers reporting relatively strong viability at a level higher than in the past decade.
Peter Knoblanche, CEO of Rabobank, said that farmers across the country have exceptional resilience and adaptability due to deteriorating conditions.
"Central and west Queensland parts have been in drought for seven years, with only sporadic short-term relief, while the entire NSW has declared drought and its range is spreading to South Australia and Victoria," he said.
Drought was cited as one of the main reasons that conditions were likely to worsen by 89 percent, against 75 percent.
Although there is growing concern due to the drought, Mr Knoblanche said the long-term outlook remained positive with 93 percent of farms reporting viability
That figure is well on level during the millennium drought.
"The outlook for the Australian ag sector is fundamentally very healthy, with strong commodity prices – especially for lamb, beef, wool and cotton and, more recently, grain – which keeps the majority in strong overall positions," Knoblanche said.
Mr. Knoblanche said farmers in Western Australia, South Australia and southern Victoria enjoyed better seasonal conditions.
Whole NSW is hit by the severe drought, while more than 58 percent of Queensland is officially dry.
Australian Associated Press