Spurred by Covid-19 repercussions, farmer confidence in economic conditions has slumped to the lowest level since 2009, the Federated Farmers July Farm Confidence Survey shows.
Responses from 1725 farmers saw a net 28.6 per cent of them rated current economic conditions as bad, a 53-point drop on the January surveywhen a net 24.6 per cent considered them to be good.
"It's pretty grim looking forward as well," Feds President and commerce spokesman Andrew Hoggard said.
A net 58.7 per cent of the farmers who responded expected general economic conditions to worsen over the next 12 months, a 17-point reduction on the previous Feds survey six months ago when a net 41.5 per cent expected them to worsen.
"Clearly, concern about the global economy is weighing on sentiment," Hoggard said.
Disruption caused by the pandemic on trade, fears of a lasting global recession, along with heightened protectionism and trade wars was likely to be a large factor in the negative forward-looking expectations, Hoggard said.
"This fall in expectations is echoing the fall in business and consumer confidence, and the fall in the domestic economy from Covid-19."
Federated Farmers president, Andrew Hoggard. Photo / File
All the farming sector groups recorded worsening perceptions about current economic conditions, but the 70-point slump for meat and wool farmers was particularly severe considering they had been very positive in January.
While meat and dairy prices are reasonable at present, apprehension about what's ahead in terms of market volatility and prices paid was reflected in the farmers' answers about their own businesses.
A net 46.7 per cent of respondents reported making a profit currently, (a 9-point reduction on January 2020's survey), with 57.3 per cent making a profit, 28.9 per cent breaking even, and 10.6 per cent making a loss.
A net 35.5 per cent expected their profitability to worsen over the next 12 months, down 38 points on six months ago, when a net 2.7 per cent expected their profitability to increase.
While the latest survey showed a small rise in the number of farmers who expected their production would increase over the next 12 months, this would probably be recovery from last season's drought-affected production.
The bad news for suppliers and towns where farmers shop was that a net 12.8 per cent of respondents expected their spending to reduce over the next 12 months, a 30 point decrease on the January 2020 survey, when a net 17.3 per cent expected their spending to increase.
The survey report by Research First records farmers' three greatest concerns as: the economic situation (chosen by 15.6 per cent of respondents), regulation and compliance costs (15.3 per cent), and farmgate and commodity prices (11.1 per cent).
"The government can't do that much about the first and third of these, with global conditions being the predominant factor. But it can do something about ensuring regulation and compliance costs are sensible and affordable," Hoggard said.
One positive was that farmers were more confident about recruiting staff, perhaps because job options in other industries hit harder by Covid-19 fallout had narrowed.
Asked about their ability to recruit experienced farm staff, a net 28.1 per cent of respondents reported it had been harder to recruit skilled and motivated staff, a 13 point reduction on January 2020's survey when a net 41.3 per cent reported it had been harder.
