However, a glimmer of optimism is returning to the agricultural sector, with the latest Rabobank Rural Confidence Survey registering a small uptick in farmer confidence.
The survey – while taken in late August and early September during the period when the GlobalDairyTrade auctions had registered two price rises after 10 consecutive falls – showed dairy farmers had not yet started to feel optimistic about a price recovery impacting the current season.
But beef and sheep farmers expressed a more optimistic outlook for the performance of their own farm businesses in the 12 months ahead.
The survey also revealed that over the next two years, more than half of the country’s farmers (55%) were looking to change their farm management system – with this figure increasing to 64% in dairy – as current conditions dictated the need for productivity gains.
Overall, the latest Rabobank survey found the majority of New Zealand farmers expected conditions in the rural economy to deteriorate rather than improve, resulting in a negative net confidence reading of -39%, a slight improvement from -45% in the previous survey.
More than half of the country’s farmers (53%) held the view that conditions would worsen over the coming year, however this was down from 56% with that view in the previous survey.
The percentage of farmers expecting an improvement in the agricultural economy increased slightly to 14%, up from 11%, while 32% of surveyed farmers expected similar conditions to the previous 12 months.
Rabobank general manager country banking NZ Hayley Moynihan said beef and sheep farmers posted a large increase in the intended level of their investment, with 90% looking to either increase (18%) or maintain (72%) their on-farm investment.
“Increased confidence in this sector is largely attributable to the strong upswing in beef
prices, with bull beef prices around 33% higher than what was reached this time last
year,” she said.
Moynihan said the latest survey continued to reflect the two consecutive seasons of low dairy prices that were weighing not only on sentiment in the dairy industry, but right across the wider New Zealand economy.
“With dairy representing nearly 30% of the value of all NZ exports, the farmgate milk price is not only having a huge impact on export revenue, but on the wider economy as farmers reduce their spending,” she said.
This situation had profoundly impacted dairy sector sentiment Moynihan said, despite
some buffering from lower interest rates and the weaker NZ dollar.
Dairy sector confidence would, however, be expected to further improve, she said, off the
back of this week’s additional large jump (of 16.5%) in the GDT index.
“The increase in the GDT price index is warmly welcomed by dairy producers, and is more
representative of current global market fundamentals following the over-correction,” Moynihan said.
“However, there is still a way yet to go until we see prices returning towards
a more sustainable level.”
