Farmer confidence is now at its lowest level since the March 2016 quarter, with concern over government policy identified as the key factor, says Rabobank New Zealand chief executive Todd Charteris.

Rabobank's latest Rural Confidence Survey found that farmers across all sectors were increasingly pessimistic about prospects for the agricultural economy in the year ahead.

Charteris told The Country's Jamie Mackay that although the drop was "concerning", it wasn't unexpected.

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"What's come through, and it has been a theme for the last three or four quarters, is the concern over government policy and really that remains the absolute main reason for farmer pessimism".

Following a gradual rise over the previous three quarters, the overall net rural confidence reading plummeted to -33 per cent, down from - two per cent last quarter.

The survey – completed in late August and early September – found the number of Kiwi farmers expecting the rural economy to worsen in the coming 12 months had risen to 41 per cent (from 23 per cent last survey), while those expecting an improvement had fallen to eight per cent (down from 23 per cent).

A total of 48 per cent were expecting similar conditions (down from 54 per cent).

Rabobank New Zealand CEO Todd Charteris. Photo / Supplied
Rabobank New Zealand CEO Todd Charteris. Photo / Supplied

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In line with the drop in overall rural confidence, the latest survey found farmers across all
sectors were also significantly less optimistic about the performance of their own farm
businesses in the coming 12 months, with the number expecting their business
performance to improve declining to 24 per cent (from 31 per cent in the previous survey).

Those expecting their business performance to worsen rose to 20 per cent (from 10 per cent), while 55 per cent expected no change (down from 58 per cent).

Dairy farmers recorded the biggest decline in sentiment when it came to the outlook for
their own farm businesses in the year ahead.

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There was now an even spread of dairy farmers expecting their farm business performance to improve and to worsen (both 21 per cent).

Similarly, sheep and beef farmers were split on the prospects for their own businesses, with 20 per cent expecting an improvement and 20 per cent expecting performance to worsen.

Horticulturalists continued to be the most buoyant of all sectors with 37 per cent expecting improved performance from their business in the coming year and only 9 per cent expecting performance to worsen.

Negative public perceptions of farming was also having an affect on confidence, which needed more investigation said Charteris, who pointed out that independent research undertaken by UMP showed that the urban view of farming was a positive one.

"There's no doubt farmers are feeling that urban-rural divide but actually when you survey on the other side of that research it tells a different story".

Charteris said it was important to note the latest survey period concluded just before the Government released its freshwater policy statement, a fact he thought would make the next survey "interesting".