Overview
New Zealand’s agricultural sector is witnessing a notable shift in confidence levels, primarily driven by government policy changes and rising dairy prices. The latest Rabobank rural confidence survey indicates a strong rebound in farmer confidence, particularly among dairy farmers, following a historic low in September.
Key Findings from the Rabobank Survey
- Farmer Confidence: There’s been a significant increase in farmer confidence, with the survey showing a rise to a net reading of -47% from -72%. This improvement is largely attributed to dairy farmers, who have shown the most substantial increase in sentiment.
- Government Policy Impact: Government policy has emerged as a dual factor, being both a cause for optimism and pessimism among farmers. 59% of farmers expecting improved conditions cite government policy as a reason for their optimism.
- Economic Outlook: Despite the uplift, the overall sentiment remains cautious, with 58% of farmers anticipating a downturn in the broader agricultural economy over the next year.
Sector-Specific Trends:
- Dairy Sector: Dairy farmers are notably more optimistic, thanks to healthier Global Dairy Trade (GDT) results and an upward revision of the Fonterra farmgate milk price payout forecast.
- Horticulture: Horticulturalists are also more positive, likely due to strong overseas demand for New Zealand fruits and vegetables and increased labour availability.
- Sheep and Beef: Sheep and beef farmers, while slightly more optimistic about their own businesses, remain concerned, particularly due to low lamb prices.
Reasons for Pessimism and Optimism
- Pessimism: The main reasons for a negative outlook include falling commodity prices (52%) and rising input costs (46%).
- Optimism: Factors contributing to a positive outlook include overseas market economies and rising commodity prices.
Farm Business Prospects
- Dairy Farmers: Leading the positive trend, dairy farmers are more optimistic about their own farm businesses.
- Horticulture: Growers expect an improvement in their business performance.
- Sheep and Beef: Despite a slight increase in optimism, sheep and beef farmers remain largely concerned, with beef prices holding up better than lamb prices.
Viability and Investment Intentions
- Business Viability: The survey reveals a decrease in the number of farmers viewing their operations as unviable, dropping from 12% to 6%.
- Investment Intentions: There’s an increase in investment intentions among farmers, with a net reading of -15% compared to -36% previously. Growers show the strongest intentions, while sheep and beef farmers are more reserved.
The survey by Rabobank highlights a complex landscape in New Zealand’s agricultural sector, with varying levels of confidence across different farming sectors.
While there is a general rebound in confidence, particularly in the dairy sector, the overall sentiment remains cautious with concerns about the future performance of the broader agricultural economy.
