“The survey found the lowest level of confidence in the economy since July 2009 when we were just emerging from the global financial crisis,” vice-president and economics spokesman Andrew Hoggard said.
“As with the wider business community I think we’re seeing concern about the impact of global uncertainty and instability on our key export markets, with the likes of Brexit and United States-China trade relations.”
Just 5.1% of farmers expect general economic conditions to improve over the next year while 45.9% expect they will get worse.
The level of pessimism is a fivefold increase on the July 2017 survey.
Continuing difficulty recruiting staff is another finding that stood out, with 40.1% finding it harder over the past six months to recruit skilled and motivated staff, up 4.2 points on the July 2018 survey.
“While that might reflect seasonal factors it’s also driven by the generally tight labour market and immigration restrictions,” Hoggard said.
“Dairy and arable farmers have found staff recruitment particularly hard.
“This indicator has steadily worsened over the 10-year life of the survey and is at a record level of difficulty.”
It is the 20th time the Federation has commissioned the twice-yearly survey and the response of 1462 farmers was one of the biggest yet.
Just on 56% of respondents said they are making a profit, down from 62.3% in July 2018 with 9.3% making a loss, up from 7.8%. Another 32.4% are just breaking even, up from 27.8%.
“Meat and wool farmers continue to be the most positive about their current profitability and their sentiment improved a little since July.
“But dairy’s worsened – no surprise given the fall in dairy commodity prices and farmgate milk price forecasts in the second half of 2018 – and arable’s also fell slightly,” Hoggard said.
Neary 30% of respondents expect farm profitability will get worse but only 18% expected a profit improvement.
“Optimism about future farm production has decreased over the past six months, particularly for dairy and arable farms. Dairy farms have seen the largest net negative change between July and January (-20.2%).”
However, farmers expect their spending will increase slightly over the next 12 months, particularly meat and wool farmers.
But farmers in most regions expect their debt to increase over the next year, with the North Island’s east coast the exception.
Regulation and compliance costs remain the greatest concern for farmers.
Concerns about climate change policy and the ETS that became increasingly prevalent over the past three surveys have levelled out and concern about the political situation has also decreased.
And, most unusually for a January survey, drought did not register as a concern.
