Farmers are staying positive despite the downturn in commodities prices and a resurgent New Zealand dollar, Federated Farmers president Bruce Wills said yesterday.

Wills, a Hawkes Bay sheep and beef farmer and a former banker, said the mood at Federated Farmers' three-day conference in Auckland was favourable, even through the sector faced a number of headwinds.

"Obviously the climate is an ever-present pressure on us, but so are the wildly fluctuating exchange rates and the very big changes in commodities prices this year."

Wills said the rural sector had in recent years learned to be more resilient when faced with changing conditions.


"Dairy prices have rebounded somewhat, but at one point they were down 40 per cent on last year's, and wool prices are still down by more than 40 per cent, but farmers are coming to grips with the fact that we now live in this wildly fluctuating world."

Wills said the biggest challenges facing farmers today were environmental, and mostly to do with water quality - particularly in the areas with intensive dairy farming.

He said the need to clean up New Zealand's polluted waterways had met with more acceptance from farmers than it did 12 months ago.

Farmers had also faced up to the reality of volatile exchange rates, he said.

"Increasingly, farmers are coming around to the point of view that there is no point in jumping up and down about things that we cannot control.

"Obviously the strong New Zealand dollar is a concern but our big hope is that if we see a big fall-off in commodities prices, then normally the currency comes off as well, which will provide a buffer."

Farming, fishing and forestry accounted for 69 per cent of New Zealand's exports last year.

"We are good at producing high-quality food, and we have a reputation for it, so we are in a very good place in the world as it stands today, so farmers are optimistic," Wills said.

Finance Minister Bill English - who addressed yesterday's session - said the primary sector was far from being a "sunset" industry.

Farmers should focus on helping grow a more competitive economy, rather than spending too much time worrying about the gloomy state of overseas economies, English said.

Europe would remain a dark cloud on the horizon for the world economy but he said farmers needed to focus on what could be influenced at home: "We've got to be careful we don't let that problem paralyse us and certainly that we don't wait for Europe to get fixed because it won't."