Delegates at the ABARE OUTLOOK conference today heard the prospect of a financial recovery for farmers is promising in 2007-08, despite the disastrous seasonal conditions of recent years.

ABARE's agriculture branch head Lisa Elliston said improvements in farm incomes and sustained levels of equity will be essential to the drought recovery process.

"At the end of 2006-07, we estimate that close to 90 per cent of all broadacre producers had maintained high levels of equity and of those almost two thirds generated positive incomes," Ms Elliston said.

"These producers are in the best position to recover from drought, with the capacity to take full advantage of strong commodity prices enabling them to rebuild and expand through a combination of cash flow and debt financing."

While the future looks encouraging for many farmers, Ms Ellison said producers who have suffered two years of crop failure struggled during 2006-07.

Andrew McBain, from Australian Agricultural Contracts Limited, said there are ways in which producers can minimise their income risks, like insurance.

"AACL is effectively an insurance company that provides producers with the ability to underwrite their income and gain access to equity finance," he said.

Mr McBain said his vision for the future of farming includes family farms that are larger, but with farms owning the option to use land rather than owning the land themselves.

Khan Horne from the National Australia Bank discussed the importance of producers developing risk management strategies to mitigate income risk.