Farmer confidence stays high

File photo

Farmer confidence remained close to historically high levels in the July quarter, helped by high farmgate prices and favourable seasonal conditions, Rabobank says.

The Rabobank rural confidence survey, taken last month, showed net farmer confidence at 42 percent, down from 45 per cent in the previous survey in March.

Farmers expecting the agricultural economy to improve in the next 12 months eased to 48 percent, compared to 52 per cent in the earlier survey, while those expecting conditions to worsen fell marginally.

Sheep and beef farmers were the most optimistic, with 49 percent expecting conditions to improve, followed by 44 per cent of dairy farmers.

Rabobank general manager New Zealand Ben Russell said overall farmer confidence had plateaued at historically high levels, due mainly to expectations of favourable returns at the farmgate in coming months.

Producers were recognising their competitive pastoral advantage was starting to pay dividends in international markets due to underlying global food demand, providing some overall reassurance and confidence for the agricultural industry, Russell said.

Sheep and beef farmers' optimism had been driven by record-high lamb prices.

But he also noted that the New Zealand dollar had climbed from around US80c when the survey was taken, taking the edge off the good returns.

The survey found 54 percent of farmers expected their business to improve in the coming 12 months.

Of those farmers expecting the agricultural economy to improve, 68 percent cited rising commodity prices as the reason - particularly dairy farmers at 71 per cent and horticulturalists at 79 per cent.

Twenty four percent attributed their positive outlook to overseas markets and economies, with respondents noting the global shortage of food and particularly protein as being a key driver of market returns, Rabobank said.

Those surveyed also expected increased confidence in the agricultural sector, better management and efficiencies, both on-farm and with processors, to be positive for the agricultural economy.

Farmer investment expectations had increased to the highest level since August 2008, following a surge in the last survey, with 36 per cent expecting to increase their total farm investment up from 34 per cent last survey.

The number expecting to cut investment remained at 4 per cent.

The survey showed 38 percent of sheep and beef farmers expected to increase farm investment in the coming 12 months, with only 4 per cent expecting it to decrease.

"This bodes well for stabilisation of the national sheep flock and indicates that some rebuilding of the flock will occur over the coming season,'' Russell said.

Among dairy farmers, 40 per cent expected to lift farm business investment in the coming 12 months, but horticulturalists were finding the environment tougher with only 10 per cent expecting to increase investment and 24 percent expecting to decrease investment in their business.

"This is likely to be a reflection of the high NZ dollar lowering returns for export growers and the challenges some kiwifruit growers are currently facing with Psa,'' Russell said.

The survey is carried out by research agency TNS, interviewing a panel of about 450 farmers each quarter.

- NZPA