Word of the day

Fallacious – based on a mistaken belief; embodying a fallacy; tending to deceive or mislead; delusive.

Sowell says

In liberal logic, if life is unfair then the answer is to turn more tax money over to politicians, to spend in ways that will increase their chances of getting reelected.

— Thomas Sowell Wisdom (@TheThomasSowell) March 3, 2022

Thatcher thinks

I sometimes think the Labour Party is like a pub where the mild is running out. If someone doesn't do something soon, all that's left will be bitter. (Laughter). And all that's bitter will be Left. pic.twitter.com/8AlxNoS7OS

— Margaret Thatcher (@MrsMThatcher) March 9, 2022

Farmer confidence at low ebb

Farmer confidence in Federated Farmers’ January survey was the at the lowest ebb since the biannual surveys began in 2009:

. . . Of responses from nearly 1000 farmers from around the country, a net 7.8 percent considered current economic conditions to be good, a 10.1 point decline from the July 2021 Federated Farmers Farm Confidence Survey, when 17.9 percent considered conditions to be good.

Looking forward, a net 64 percent of farmers believed general economic conditions would worsen over the next 12 months, a 25-point deterioration from the 39 percent in the July survey. Sentiment about general economic conditions is at the lowest level since the Feds surveys began in July 2009, surpassing the previous low in July 2020

“The results are even more disturbing when you consider farmers were answering the survey before the surge of Omicron cases in New Zealand and Russia’s invasion of Ukraine, both of which will weigh on economic growth,” Feds President and economics spokesperson Andrew Hoggard said. 

The Russian invasion will hit food production and that will boost prices but it will also hit the supply of fuel and fertiliser, the prices of which have already had steep price rises in the last few months.

While a net 61.1% of farmers reported making a profit, a 5.5-point increase on July 2021, a net 11.2% expected their profitability would decline in the year ahead, 16 points down on six months earlier when a net 4.4% expected profitability would improve.

“We’re getting strong returns on meat and dairy right now thanks to high global demand and food security concerns but clearly farmers are seeing a lot of that revenue going right back out again with higher fuel and fertilizer prices, rising labour costs, and the hot inflation that is affecting every other New Zealander,” Andrew said.

The survey showed a net 52.7 percent of respondents expected their spending to increase over the next 12 months (up from 32.6% six months ago) “but this will be due to higher expected input costs rather than farmers feeling confident to spend and invest”.

That is spending for business as usual, not for anything that will improve production, nor for environmental improvement and enhancement.

A net 1.8% of respondents expected their production to increase over the year ahead, a 13.4-point drop from July 2021 when a net 15.3% expected it to increase.

“This finding is another substantial drop and it was before February’s heavy and unseasonable rain, which caused a lot of damage and loss for many arable farmers,” Andrew said.

Some traditionally summer dry areas have already had close to their annual average rainfall.

Last year’s survey pinpointed the sector’s struggle to fill workforce gaps as a huge issue, with nearly half of respondents stating it was harder to recruit skilled and motivated staff. January’s result shows negligible improvement, with just a 0.2-point decrease on that finding.

Unemployment is down to the unemployable, even though the number of people on JobSeeker benefits has been increasing.

Farmers struggle to employ locals and closed borders have kept out experienced farm workers, shearers and back packers who usually fill jobs on farms and orchards.

“We should all be pleased unemployment levels are so low in New Zealand given assaults on our economy from all sides, but this dire farm recruitment situation underlines why Federated Farmers continues to advocate to government for additional workers – especially in dairy – to cross our borders.”

Asked to list their greatest concerns, those farmers who completed the January survey chose climate change policy and ETS (18.7% of respondents), followed by regulation and compliance costs (13.1%), and freshwater policy (9.5%). This result is unchanged from the July 2021 survey.

There is a very real fear that the Paris Accord’s stipulation that climate change mitigation shouldn’t come at the expense of food production will be ignored.

Farmers are also concerned that the anti-farmer, and anti-dairy in particular, lobby will lead to policies that are political and bureaucratic rather than scientific.

“I suspect the global economy will be right up there if the survey were done right now,” Andrew said.

The three highest priorities respondent farmers wanted the Government to address were the economy and business environment (15.0%), fiscal policy (12.1%) and regulation and compliance costs (11.7%). This compares to the July 2021 survey when the top three priorities were regulation and compliance costs (14.0%), economy and business environment (13.1%), and supporting agriculture and exporters (10.4%).

When prices for most primary produce are at least good, and for milk, the highest ever, the outlook for farming ought to be bright.

But global supply chain uncertainties, inflation, and the threat of climate change policies are compounded by Covid-19 in undermining confidence.