A recent survey by Rabobank New Zealand reveals a record low in farmer confidence, with 77% of respondents expecting the broader agricultural economy to deteriorate over the next year. Only 5% anticipate an improvement, highlighting the challenges facing the sector.
Main Concerns: Commodity Prices and Input Costs
Bruce Weir, Rabobank New Zealand’s Country Banking General Manager, attributes the decline in confidence primarily to lower commodity prices.
A staggering 54% of farmers cite this as the reason for their pessimistic outlook. “Following our last survey, Fonterra reduced their farmgate milk price forecast from $8.00kg/MS to $6.75kg/MS, while sheep and beef product prices have also fallen,” Weir notes.
Additionally, rising input costs are a significant concern for 46% of farmers. These costs add to the financial strain, making operations increasingly challenging.
Other Factors: Government Policies and Overseas Markets
Government policies, which have been a top concern since 2020, were cited by 35% of farmers.
Interestingly, for the first time since 2020, government policy did not rank in the top two reasons for concern. However, it remains the main reason for optimism among the small percentage of farmers who expect conditions to improve.
Overseas markets and rising interest rates are also on the radar, concerning 29% and 18% of farmers, respectively.
Farmer Wellbeing
Weir emphasises the importance of farmers not neglecting their own health and wellbeing. The survey found that farmers are increasingly pessimistic about the viability of their own businesses.
A Glimmer of Hope
Despite the overall gloomy outlook, there is a slight uptick in growers’ confidence in their operations, rising from -8% to +22%.
Rabobank’s Support Initiatives
In response to the challenges facing the industry, Rabobank has introduced a new module in its free one-day financial skills workshop.
The bank plans to run 19 such workshops across New Zealand, open to both clients and non-clients, with additional sessions planned for late 2023 and early 2024. “It’s important to reaffirm Rabobank’s commitment to our food and agri clients and to the wider sector,” says Weir.
The Rabobank survey paints a concerning picture of farmer confidence in New Zealand, influenced by a range of factors from commodity prices to government policies.
While there are some signs of optimism, the overall sentiment remains cautious, underscoring the need for targeted support and intervention.
