Farmer confidence drops

Federated Farmers January Mid-Season Farm Confidence Survey shows farmers are gloomy about the general economic outlook and concerned about staff recruitment:

“The survey found the lowest level of confidence in the economy since July 2009, when we were just emerging from the Global Financial crisis,” Federated Farmers Vice-President and economics spokesperson Andrew Hoggard said.

“As with the wider business community, I think we’re seeing concern about the impact of global uncertainty and instability on our key export markets, with the likes of Brexit and US-China trade relations.”

We’re also seeing farmers wary about changes to water management, tax and employment law.

Just 5.1% of the farmer respondents expected general economic conditions would improve over the next 12 months, while 45.9% expected they would worsen. The level of pessimism is a fivefold increase on the July 2017 survey.

Continuing difficulty recruiting staff is another finding that stood out, with a net 40.1% of respondents finding it harder over the past six months to recruit skilled and motivated staff as opposed to easier, up 4.2 points on the July 2018 survey.

“While that might reflect seasonal factors, it’s also driven by the generally tight labour market and immigration restrictions,” Andrew said.

“Dairy and arable farmers have found staff recruitment particularly hard.

“This indicator has steadily worsened over the 10-year life of the survey and is at a record level of difficulty.”

Employment changes made late in the previous government’s term made recruitment and retention of immigrant workers harder and this government has done nothing to remedy that.

It was the 20th time the Federation had commissioned the twice-yearly survey and the 1,462 responses to agricultural market research company Research First was one of the biggest yet.

Just on 56% of respondents said they were currently making a profit, down from 62.3% in July 2018. Meanwhile 9.3% are making a loss, up from 7.8% and 32.4% are just breaking even, up from 27.8%.

The odd loss is expected in farming, but year after year just breaking even or mining equity is unsustainable.

“Meat and wool farmers continue to be the most positive about their current profitability, and their sentiment improved a little since July. But dairy’s worsened – no surprise given the fall in dairy commodity prices and farmgate milk price forecasts in the second half of 2018 – and arable’s also fell slightly,” Andrew said.

Looking out over the year ahead, nearly 30% of respondents expected farm profitability would worsen vs 18% who expected profit improvement – a 21.8% fall on July’s 10.4% net positive score.

“Optimism about future farm production has decreased over the past six months, particularly for dairy and arable farms. Dairy farms have seen the largest net negative change between July and January (-20.2%).

The upwards trend of the GlobalDairyTrade auctions this year gives hope, but it was coming off a low base and few are banking on a payout of more than $6 a kilo.

Other findings:

– Farmers overall expect their spending will increase slightly over the next 12 months, particularly meat and wool farmers.

– Farmers in most regions expected their debt levels to increase over the next year, with the North Island’s East Coast the exception.

– Continuing a finding of the last four surveys, regulation and compliance costs remain the greatest concern for farmers. Concerns about climate change policy and the ETS that became increasingly prevalent over the past three surveys has levelled out, and concern about the political situation has also decreased.

– For this survey drought did not register as a concern – most unusual for a January survey.

Drought might not have registered when the survey was done, but it will be now, especially in the Tasman District where fires are still raging.

Nelson farmers affected by this week’s fire are beginning to count their losses, while others in the region are preparing for the increasing possibility of severe drought.

Farmer Steve German, whose stock had to be put down because of the fire, said it was going to be a hard road replacing them.

Mr German had about 80 breeding ewes up Redwood Valley Road next to a forestry block when the wind changed direction on Tuesday and went down the valley.

He said the SPCA shot some of the sheep on site the next morning and then in the afternoon they went up with the fire and police and mustered everything out of there.

In total Mr German said he lost about 66 ewes.

“Pretty much the whole flock of Suffolk breeding ewes is gone,” Mr German said.

“I’ve been breeding them for 10 years… it was my premium breeding line of Suffolk ewes… [they were] a real nice flock of sheep… real shame to see them gone,” he said.

Most of the homes evacuated due to the blaze were lifestyle blocks with a mixture of animals, including sheep and cattle. . . 

Farmers whose stock survived will be concerned about feeding them if their pastures, crop, hay and silage have been destroyed by fire.

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