The survey – completed in early September – found net farmer confidence across the nation fell to -32%, down from -26% previously.
The number of farmers expecting the rural economy to improve in the next 12 months was down to 13% (from 16% last quarter), while the number expecting the rural economy to deteriorate rose to 45% (up from 42%).
A total of 40% were expecting similar conditions.
The chief contributor to the net fall was markedly lower sheep and beef farmer sentiment, negating higher confidence levels reported among both dairy farmers and horticulturalists.
Rabobank New Zealand chief executive Todd Charteris says net confidence among sheep and beef farmers dropped to -51% from a previous -18%.
“More than half of all sheep and beef farmers with a pessimistic outlook cited government policy as a key reason for concern, with many likely to be worried about the potential for freshwater regulations announced in late May to negatively impact their operations,” Charteris said.
Adding it was not surprising to see covid-19 cited as a concern given its ongoing impact in the food sector and the importance of this sales channel for red meat products.
“We’re currently seeing the beginnings of a recovery in the food service sector, however, a return to pre-covid-19 consumption levels is still a long way off, and there is potential for a prolonged recovery to impact export revenues for New Zealand beef and lamb – particularly for higher-value cuts such as lamb racks and prime steaks,” he said.
Dairy farmers and horticulturalists were more upbeat about the fortunes of the agricultural economy.
Dairy farmer net confidence rose to -29% from -33%, while net confidence among horticulturalists was up to -3% from -20%.
Improving demand was the key reason for optimism among both dairy farmers and growers.
Charteris says the lift in Fonterra’s milk forecast for the current season had also lifted spirits among the dairy sector.
“Growers have also been buoyed by recent positive news with the NZ Institute for Economic Research announcing in July that export revenues for horticultural products rose strongly in the year to June in spite of covid-19 disruption.
All signs pointed to another year of robust demand for New Zealand produce, with the value of our horticultural exports into China having doubled since 2010 and further growth anticipated, he says.
“While falling outside the latest survey period, growers will also have welcomed this week’s government announcement on immigration changes that will help to address labour shortages within the industry,” he said.
There were also farmers in these two sectors adopting a more pessimistic stance over an optimistic one, citing government policy and covid-19 as the reasons
He says horticulturalists identified overseas markets as their major source of apprehension.
Farmer expectations for their own farm business performance in the year ahead was marginally higher than the previous survey. While fewer farmers expected their own farm business to perform better (13% from 16% previously), there was a more significant drop in those expecting farm business performance to deteriorate (37% from 42% previously).
This resulted in the net reading climbing to -24% from -26% previously.
