Farmers feeling more confident

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New Zealand farmer confidence bounced in the second quarter to the first net positive reading in more than a year, with a significant upswing across all sectors as rising dairy prices fuelled positivity.

A net 3 per cent of farmers were optimistic about the outlook for the agricultural economy over the next 12 months, from net 42 per cent pessimistic in the previous quarter, and the first time optimists outnumbered pessimists since March 2015, Rabobank's latest rural confidence survey says.

A quarter of farmers expected conditions to improve, up from 11 per cent last quarter, and 22 per cent expected conditions to worsen, down from 53 per cent. About 52 per cent expected similar conditions, up from 34 per cent.

"Since the last survey was undertaken in early March, dairy prices have increased in five of the last seven GlobalDairyTrade (GDT) auctions and Fonterra posted an opening forecast farm gate milk price for the 16/17 season of $4.25," Rabobank New Zealand general manager for country banking Hayley Moynihan said in the report.

Last year's slump in dairy prices weighed on the rural sector, and government figures showed exports of milk powder, butter and cheese were down 10 per cent to $11.13 billion in the year ended May 31.

Rabobank's Moynihan said the size of the dairy industry meant the modest improvement in dairy prices and expectations prices will continue to rise were likely to be the biggest factors in overall farmer confidence improving.

A net 9 per cent of dairy farmers were positive about their own businesses in the second quarter, from net 45 per cent negative in the previous quarter.

Sheep and beef farmers improved from net 5 per cent negative to net 22 per cent positive, and net 47 per cent of horticulturists were positive, from net 45 per cent.

"Record kiwifruit sale volumes for the 2015/16 season and another extraordinary outlook for the new season has ensured that grower optimism for the industry and their own business performance expectations remains high," Moynihan said.

The survey also found that half of farmers were looking to change their farming system in the next two years.

- BusinessDesk