The latest report results from the Rabobank farmer confidence survey shows the state’s farmer confidence has dipped to a three-year low.

Rabobank Country Banking national manager Todd Charteris said despite the downturn in confidence, there were still a “number of positive factors at play” which had kept sentiment from sliding further, including strong livestock prices, low interest rates and easing cost pressures on items such as fertiliser and fodder.

Mr Charteris said the effects of the flooding were still being felt, with extensive damage to irrigation infrastructure, fencing and pastures.

Commodity prices were reported as the biggest factor impacting confidence, with 81 per cent expecting conditions to worsen in the next quarter. This is up from 65 per cent in the previous quarter.

Dairy farmers were the most concerned about the price outlook, with farmgate milk prices remaining below the cost of production, Mr Charteris said.

“Tasmanian dairy farmers have been hard hit, with the bulk of the state’s milk supply going to the two largest milk processors,” he said.

“While there is light at the end of the tunnel, with the taps of supply starting to turn off around the world, it will take most, if not all, of the 2016/17 season to flow through into farmgate milk prices.”

Across the board however, Tasmanian farmers were expecting gross farm incomes to be similar to, or down on, 2015/16.

Overall, 42 per cent were expecting incomes in the 2016/17 financial year to be similar to last year’s result, while 43 per cent were anticipating a weaker result.

Those expecting a stronger financial performance stood at 15 per cent.

While conditions remained extremely challenging in the dairy sector, input cost pressures were down, with fertiliser prices at around decade lows and grain prices also under pressure.

“The beef market is also underpinning strong prices for dairy cull cows, despite higher numbers of chopper cows hitting the market,” he said.

Strong market dynamics continue to underpin confidence in the beef and sheep sectors, Mr Charteris said, with graziers looking at good production prospects over coming months.

The next survey report is due in December.