Farmer confidence falls further in quarter

Farmer confidence has slipped further into negative territory.

Rabobank's rural confidence survey fell for the third consecutive quarter, on concerns over Government policy, falling commodity prices, overseas markets/economies and rising input costs.

Sentiment was down among dairy farmers and sheep and beef farmers but rose among horticulturists. More farmers in both sectors were expecting conditions in the agricultural economy to worsen in the coming year than those who were expecting an improvement.

That was the first time that had been seen since the first quarter of 2016 and it was particularly unusual during a period where product prices were at good levels and the climate had generally been favourable for most producers, Rabobank New Zealand general manager for country banking, Hayley Gourley, said in a statement.

Rather than one single factor driving confidence lower, the survey results indicated a range of factors were responsible.

The proportion of farmers citing Government policy as a reason for a negative outlook was relatively unchanged since the last quarter.

However, there had been a jump in the number of farmers flagging concerns over falling commodity prices, rising input costs and overseas markets.

Dairy farmers were chiefly behind the increased concerns around commodity pricing while both dairy and sheep and beef farmers were now considerably more worried about rising farm input costs.

Almost half of those dairy farmers expecting conditions to worsen cited falling commodity prices as a key factor.

That was likely to have been driven by lower pricing at recent GlobalDairyTrade events and Fonterra's downward revision of its 2018-19 forecast farm-gate milk price in October.

The survey was completed last month and Fonterra last week week cut its forecast again from a range of $6.25-$6.50 to $6-$6.30.

Dairy farmers and sheep and beef farmers were also more concerned about rising farm input costs, which had increased over recent months as a result of spiralling global urea prices, local prices having increased to $165 a tonne, Ms Gourley said.

Comments collected in the survey suggested Fonterra's recent performance issues and Mycoplasma bovis were further areas of concern.

In contrast, 34 per cent of horticulturists were now expecting their own business performance to improve in the next 12 months, up from 26 per cent last quarter, while the number expecting performance to worsen fell from 15 per cent to 10 per cent.

Overseas demand for New Zealand's horticultural products remained strong, while the conclusion of the Comprehensive and Progressive Trans Pacific Partnership (CPTTP) was a further recent boost for horticultural exporters, she said.