Farmers more confident in themselves, less so about overall economy – Rabobank survey

Rabobank's latest survey finds farmers are more confident about their own performance, but less so about the overall agri-economy. Photo / RNZ, Sally Round

RNZ

Farmers are more confident about the performance of their own business but are less positive about the broader agri-economy, the latest Rabobank Rural Confidence Survey has found.

The rural lender’s quarterly survey of about 450 farmers found the number self-assessing their own farm business as unviable decreased from 9 per cent last quarter to 7 per cent.

Sheep and beef farmers recorded the most significant upward lift in confidence, from -31 per cent to -17 per cent last quarter.

Rabobank chief executive Todd Charteris said sentiment among sheep and beef farmers has been at dire levels over recent quarters, so it was encouraging to see this creeping upwards.

“This is likely to be largely attributable to the strong pricing outlook for beef over the months ahead, It’s also good to see slight rises in confidence in their own businesses among dairy farmers and horticulturalists,” Charteris said.

“Dairy farmers saw some healthy price rises at GDT [Global Dairy Trade] auctions during May and early June, which will have put a bit more of a spring in their step, while horticulturalists continue to see good growing conditions that are helping to set them up for good returns.”

But despite the improved confidence in their own businesses, farmers were now more pessimistic about the prospects for the broader agri-economy – falling to -25 per cent from -16 per cent previously.

Higher prices, lower commodity prices and rising interest rates were the three major reasons cited for the drop in confidence.

Charteris said Rabobank generally saw the reading for farmers’ confidence in their own businesses sitting a little higher than for the broader agri-economy, but the two measures do usually move in the same direction.

“So it is a bit unusual to see them taking divergent paths this quarter,” he said.

“It is hard to put a finger on why this is the case, but one possible reason might be that farmer concerns about the prospects for New Zealand’s overall economy are feeding into pessimism about the prospects for the agri-economy – and we did see a few comments in the verbatim responses to the agri-economy question that support this view.”

Regardless of the reason, Charteris said it was clear that farmer sentiment remained subdued and had been for an extended period of time.

“Given the importance of the sector to the wider economy, it really is essential that everyone involved with the industry bands together to support the country’s food producers and to get things moving in the right direction,” he said.

- RNZ