Headwinds expected, will abate

Rabobank’s Rural Confidence Survey shows the global economy continues to create headwinds for farmers.

The latest quarterly Rabobank Rural Confidence Survey has shown that while New Zealand farmers remain more optimistic about the performance of their own farm businesses relative to the wider agricultural economy, both confidence indicators fell this quarter. Both indicators are now in negative territory, showing that more New Zealand farmers expect conditions to worsen, rather than improve. . .

Rabobank New Zealand CEO Ben Russell said the further fall in confidence reflects the uncertain global economic environment that New Zealand farmers are operating in, which has placed downward pressure on commodity prices.

“For many, coming out of a season where the planets aligned in terms of climatic conditions and commodity prices, many are pragmatic in their outlook that these conditions are unlikely to be repeated. Farmers have also seen commodity prices come back off their more recent highs, while the New Zealand dollar has remained very strong,” he said.

After a couple of years of high prices there’s no surprise in predictions of softening prices, particularly when the global economy is still depressed.

New Zealand and Australia are generally doing better than our traditional trading partners and we can be grateful for the efforts put into opening trade opportunities in Asia. Growing demand there will off-set some of the fall in demand from Europe and the USA.

Farmers are expecting lower prices this season but the longer term outlook is still good. The growth in the world population and growing demand for protein from developing markets should both ensure good markets for our produce.

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