“The run of strong commodity prices across virtually all sectors continues to support onfarm profitability and farmer optimism but, despite the positive broad-based returns, the uncertainty in the operating environment means many farmers are wary of what the next 12 months will bring,” Rabobank New Zealand country general manager Hayley Gourley said.
The number of farmers expecting the rural economy to improve in the next 12 months fell from 27% to 26% in the last quarter while the number expecting the rural economy to worsen jumped from 12% to 24%.
Among farmers expecting the agricultural economy to deteriorate 78% cited Mycoplasma bovis and the consequences of the eradication process as the key reason for holding that view, Gourley said.
“Government intervention was the second predominant reason for farmer pessimism, however, this was cited far less frequently than in previous quarters.”
Overall, 46% expect similar conditions for the rural economy in the next 12 months, down from 59%.
Confidence in the broader agricultural economy was driven lower by reduced expectations among sheep and beef farmers and horticulturalists.
Net confidence dropped sharply among sheep and beef farmers, turning to a negative 6% from a positive 11% while it fell to a negative 9% among horticulturalists, down from a positive 34% previously.
Dairy farmer confidence, however, strengthened, in part because of Fonterra’s strong opening forecast of $7 a kilogram of milksolids for the 2018-19 season.
“The Fonterra opening forecast was announced just prior to this survey being undertaken and has set a positive tone for the coming year amidst a period of uncertainty as the industry continues to work through the eradication of M bovis,” she said.
“Spirits have been further buoyed by a weak kiwi dollar relative to the United States dollar, helping to underpin favourable farmgate milk prices.” – BusinessDesk
