Rabobank’s latest quarterly Rural Confidence Survey shows New Zealand farmers’ confidence is lower.
Results at a glance:
• Farmer confidence has continued to decline and remains in negative territory
• High dollar and lower commodity prices main dampeners on confidence
• Negative sentiment now impacting farmers expectations of their own business performance
• Dairy sector confidence has staged slight lift
The survey which was conducted in September found:
. . . that 44 per cent of the nation’s farmers expect the agricultural economy to worsen over the next 12 months (compared to 36 per cent with that expectation in the previous quarter and 10 per cent at the same time last year). Just 15 per cent expect economic conditions to improve.
That is a bit gloomier than the rural grapevine suggests, but of course the grapevine isn’t a scientific tool.
Rabobank New Zealand CEO Ben Russell said that while New Zealand farmer confidence had been on the decline since March last year, this survey was the first to show farmers now expected a greater negative impact on their own businesses.
“Farmers’ expectations of their own farm business performance had previously held up better than confidence in the agricultural economy as a whole, however this measure has also now showed some deterioration,” he said. “This latest survey found 42 per cent of farmers expect their own farm business performance to worsen over the next 12 months, compared to 29 per cent in the previous quarter.”
Mr Russell said the high New Zealand dollar and falling commodity prices were key reasons for farmers’ declining confidence, cited by 50 per cent of farmers who expected conditions to worsen.
“Overseas market conditions and rising input costs were also shown to be a concern,” he said.
Of those New Zealand farmers surveyed who had a positive outlook, confidence was being driven by the expectation of positive flow-on effects to New Zealand agriculture from the drought in the US and tight food supplies globally.
Dairy and sheep farmers I’ve been talking to are expecting returns this season to be down on last year’s and that will impact on budgets and bottom lines.
But this is regarded as a temporary blip rather than a trend. The medium to long term outlook is generally pretty positive.