New Zealand farmer confidence in the economy hit its lowest level since July 2009, dented by global uncertainty and instability in key export markets.
Only 5.1 per cent of farmer respondents said they expected general economic conditions to improve during the next 12 months while 45.9 per cent expected they would worsen and 46 per cent said they would stay the same in Federated Farmers' twice-yearly survey.
As a result, a net 40.8 per cent of farmers were pessimistic versus a net 39.4 per cent in the prior survey in July.
"As with the wider business community, I think we're seeing concern about the impact of global uncertainty and instability on our key export markets, with the likes of Brexit and US-China trade relations," Federated Farmers Vice-President and economics spokesperson Andrew Hoggard said.
According to Hoggard, the "survey found the lowest level of confidence in the economy since July 2009, when we were just emerging from the global financial crisis."
In the 2009 September quarter, New Zealand's economy emerged from what was the deepest recession since the 1990s, although growth stalled a year later.
Earlier today, Prime Minister Jacinda Ardern said New Zealand's economy remains "relatively strong" but warned that slowing global growth will have an impact.
"We have strong fundamentals and are well prepared, but we need to be realistic that if the global economy slows, it will affect our economic growth," she told Business New Zealand in a speech.
"The finger of blame for the slowdown in global trade growth is generally pointed at countries pursuing increasingly protectionist policies, which are naturally affecting confidence and investment plans," she said. Specifically, "trade tensions in the wake of tariffs imposed by the US on Chinese imports dented the strong growth seen in 2017."
She also voiced concern about Brexit and the risk of a no-deal scenario.
The twice-yearly survey was undertaken between January 7-15, attracting 1,462 responses. Since then, dairy prices at the Global Dairy Trade auction have risen twice, including a bigger-than-expected gain at this week's event.
A total of 56 per cent of respondents said they were currently turning a profit, down from 62.3 per cent in July 2018. Meanwhile, 9.3 per cent are reporting a loss, up from 7.8 per cent, and 32.4 per cent are just breaking even, up from 27.8 per cent in July.
Looking out over the year ahead, almost 30 per cent of respondents expected farm profitability would deteriorate versus 18 per cent who had expected a profit improvement in the July survey. The resulting 11.4 per cent net negative outlook contrast July's 10.4 per cent net positive score.
Another key area of concern for farmers was difficulty recruiting staff, with a net 40.1 per cent of respondents finding it harder over the past six months to recruit skilled and motivated staff, up 4.2 points on the July 2018 survey.
The survey also indicated that the single greatest concern for farmers remains regulation and compliance costs, followed by farmgate and commodity prices, climate change and the emissions trading scheme. For the first time, however, "public perception of farming" was highlighted as a concern.