Farmers plan to invest in their farms during the next year despite a slump in their economic confidence, a rural bank survey shows.
The Rabobank/AC Nielsen rural confidence survey showed the number of farmers planning to increase capital in their businesses in the next 12 months had increasedsince August, but it did not specify the number.
However, confidence slumped from August's two-year high, with 62 per cent of farmers believing the economy would stay the same over the next 12 months and 19 per cent anticipating improvement. In August, 32 per cent of farmers expected improvement.
The high exchange rate was the major factor behind their negative sentiment. Since August, the dollar has risen 4.5 per cent against the US dollar, 6 per cent against the yen and 7 per cent against the euro.
However, farmers were still confident that the dollar would fall, said Dairy Farmers of New Zealand chairman Frank Brenmuhl. "Farmers wouldn't be farmers if they weren't optimistic people in the long run."
He said they would probably invest in farm, stock and crop maintenance.
The survey showed that sheep and dairy farmers were slightly more positive than beef farmers.
Brenmuhl said farmers had had a hard winter. Feed had been tight and production had not lifted as much as hoped. Other confidence dampeners included the cost of fuel, high electricity prices and rates, he said.
Increasing compliance costs, such as the changes to annual leave entitlement under the Holidays Act, which will take effect in April next year, could add between $1000 and $1500 per employee, Brenmuhl said.
Compliance costs were an ongoing major concern for farmers, Southland sheep farmer and National vice-president of Federated Farmers, Don Nicolson said.
"We can't recover those out of the international market place," he said.
