Farmer confidence at 5-year high

November 7, 2013

There’s an air of optimism in rural communities and that’s been confirmed by a Rabobank survey:

Confidence among New Zealand farmers is at its highest level in five years,
buoyed by strong dairy prices and an improving outlook in the red meat sector.

The latest quarterly Rabobank Rural Confidence Survey – completed late last month – has showed New Zealand farmers are increasingly optimistic about the outlook for both their own enterprises and the overall agricultural sector.

After registering a large rally last quarter, confidence in the overall rural economy remained at high levels, with 54 per cent of farmers expecting conditions to improve over the next 12 months (the same as last survey) and only six per cent expecting them to worsen (down from eight per cent).

Farmers’ expectations of their own businesses had also climbed, with 57 per cent expecting their farm business performance to improve over the coming year (up from 55 per cent previously) and only five per cent expecting it to deteriorate (compared with 10 per cent last survey).

Rabobank New Zealand CEO Ben Russell said while spring was typically the time farmer confidence was at its highest, the current favourable climatic conditions, combined with improving product returns across most agricultural sectors, had increased confidence even further this year.

Mr Russell said dairy farmer confidence had remained at similar elevated levels seen in the previous survey, in the wake of a record milk price forecast for the current season (at NZD 8.30/kgMS) and generally very good spring conditions lifting milk production.

“Dairy farmers are reporting the same high levels of confidence we have been seeing in the sector since the middle of the year, with their optimism being driven particularly by high commodity prices, good overseas markets and the current milk price forecast, “ he said.

Mr Russell noted that while dairy farmer confidence was very high, there was likelihood that dairy commodities prices would ease from record high levels into 2014. “And this is something Rabobank believes should be factored into producers’ planning and budgets for next season,” he said.

For sheep and beef farmers, more than half (56 per cent) now reported they were expecting the agricultural economy to improve in the next 12 months, up from 52 per cent with that expectation previously.

The number of sheep and beef farmers expecting their own farm business performance to improve also increased, to nearly half (49 per cent), climbing from 45 per cent.

Mr Russell said improving commodity prices were buoying the red meat sector, with lower stock numbers – particularly less availability of lambs – following last summer’s drought contributing to the positive outlook for commodity prices among farmers.

“At the start of the new processing season, farmgate prices are two to three per cent ahead of the prior year for lamb,” he said.

The Rabobank survey showed New Zealand farmers’ investment intentions remained strong, with 94 per cent of those surveyed expecting to increase or maintain the level of investment in their farm businesses (compared with 92 per cent in the previous survey).

“Sheep and beef farmers’ investment intentions have shown the greatest improvement,” Mr Russell said. “A total of 95 per cent of farmers in this sector reported they intended to maintain or increase investment in their businesses. This was up from 91 per cent last survey and from more than 83 per cent 12 months ago.”

In line with the overall high confidence levels, farm viability was also up – with 68 per cent of farmers considering their business viable or easily viable. This was an increase from 60 per cent in the previous survey.

“Importantly, sheep and beef farmers’ assessment of their own viability has increased to 54 per cent (up from 48 per cent previously), pushing back into net positive territory for the first time in 2013,” Mr Russell said.

Any dairy farmers who aren’t confident now almost certainly have problems of their own making.

It’s not often good production and a high payout happen at the same time, but it is this season.

The outlook isn’t as rosy for sheep and beef farmers but it is still positive.

This is very good for the rural sector, it’s good for the wider economy where at last employment is growing and unemployment is falling.

Latest labour market data shows continuing growth in employment and decrease in unemployment as the economy strengthens, Tertiary Education, Skills and Employment Minister Steven Joyce says.

Today’s Household Labour Force Survey shows employment was up by 1.2 per cent – 27,000 people – in the September quarter and 2.4 per cent in the year to September – 53,000 people.

The unemployment rate fell from 6.4 per cent in the previous quarter to 6.2 per cent.

“While unemployment is still higher than we would like, it has declined from 7.2 per cent a year ago, and the overall trend is of an improving labour market as the economy picks up. The Government is working across a number of fronts to help bring the rate down further,” Mr Joyce says.

“The economy grew at around 2.5 per cent in the year to June 2013, one of the highest rates in the OECD.

“Our participation rate grew to 68.6 per cent, up 0.5 percentage points, and remains significantly higher than Australia’s at 65 per cent.”

Wages continue to rise faster than inflation. Average weekly earnings rose 2.9

per cent in the last year, compared to inflation of 1.4 per cent.

The NEET rate for 15 – 24 year olds – youth not in employment, education or training – continued to fall, to 11.4 per cent over the quarter, the lowest since December 2008. The NEET rate for 20 – 24 year olds fell by 1.8 to 14.1 per cent.

“Momentum in the New Zealand economy is continuing to grow, with September’s trade data confirming the recovery from last summer’s drought is underway, along with the highest increase in permanent and long-term migration in over a decade,” Mr Joyce says.

Business confidence rose to 14 year highs in September’s Quarterly Survey of Business Opinion and in October’s ANZ Business Outlook.The recent Grant Thorndon International Business Report puts New Zealand sixth out of 44 economies in terms of business confidence. . .

These two surveys add another couple of stones to the foundation of good news which is helping to build that brighter future we were promised.

In #gigatownoamaru confidence is building too as the town seeks to become the Southern Hemisphere’s fastest town.


Story behind stats

February 11, 2013

Young Labour is shocked to hear of the latest household labour force survey which puts youth unemployment at 30.9%.

But youth unemployment isn’t at 30.9%.

Labour once again stands accused of putting the worst possible spin on youth education and training, Tertiary Education, Skills and Employment Minister Steven Joyce says.

“The reality is that the latest HLFS shows that just under 80 per cent of all 15-19 year olds in New Zealand are enrolled in education or training, with the total numbers up from 238,000 to 243,000 in the last quarter,” Mr Joyce says.

The survey shows that the number of young people who are both unemployed and not in education is 15,000.  While this is still too many, it represents only 4.8 per cent of the total cohort of 310,000.

An important point to note is that the headline HLFS unemployment percentage for 15-19 year olds is unusual in that it excludes the high number of young people who are in education and not in the labour market. . .

Any unemployment is concerning and youth unemployment is particularly so. Young people who go onto benefits without having worked are more likely to stay on them longer.

But the 30.9% is that Young Labour is shocked about is the percentage of people not in work which is a different and not nearly so shocking statistic.

When they get over their shock, Young Labour might like to ponder on the fact that youth unemployment increased when the then-Labour led government abolished youth rates.


The Auckland conundrum

November 9, 2012

If house prices are high in Auckland because more people want to live there.

And more people want to live there because that’s where the jobs are.

How do you explain the latest Household Labour Force Survey which shows higher unemployment there?

Matt Nolan says other factors are also involved in house prices.

And Lindsay Mitchell thinks that the unexpected rise in the number of job seekers could be not so much about people losing jobs but more about people becoming available for and seeking work.

If that’s the case it would show that expecting people on benefits who could work to do so is already having an impact.

However, the real measure of success will be when they find and keep the jobs.

If some of those jobs weren’t in Auckland then that might take some of the pressure of house prices too.


Jobs don’t come from doing nothing

August 10, 2012

The Opposition is frothing about the Household Labour Force Survey which showed a small increase in unemployment to 6.8%.

But they’re the ones who oppose every move the government makes to reduce costs, move those who can work off benefits into jobs and the development opportunities which will create more jobs.

Tertiary Education, Skills and Employment Minister Steven Joyce is right, the unemployment rate underlines the need for New Zealand to take up all our opportunities for productive growth.

The results show that it is important we allow businesses the opportunity to grow and create jobs across the economy,” Mr Joyce says.

“This includes the intensification of agriculture, the development of aquaculture, greater foreign investment, encouraging hi-tech industries, expanding oil and gas exploration, and progressing an international convention centre in Auckland.

“Those that oppose some or all of these things need to understand you can’t have more jobs without taking up these opportunities.

“It’s vital that we put out the welcome mat to businesses given the backdrop of the Global Financial Crisis and the on-going impact of the Canterbury Earthquakes.”

. . . “Our focus is on ensuring businesses have access to the necessary innovation, capital, skilled workers, resources, supporting public infrastructure and markets they need to be internationally competitive,” Mr Joyce says.

“The good news is that in the past two years 55,000 new jobs were created in New Zealand despite some of the toughest economic head winds the World has seen. However, the reality is that if we want more and better jobs then we need to encourage more successful, growing and competitive companies to be based here.”

Jobs don’t come from doing nothing.

(Photo borrowed from Credo Quia Absurdum Est).

We have to do something but not just anything. It’s no use postponing the day of reckoning with tax, borrow and spend policies as Labour did.

We need productive jobs which earn export dollars.

It’s time to stop saying no and learn how to say yes to opportunities boost economic growth and environmental protection.

 

 

 

 


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