Farmer confidence has bounced back to where it was pre-Covid, but attracting and retaining staff remains a headache, according to the latest Federated Farmers Farm Confidence Survey.
Of the nearly 1,100 farmers who completed the Research First survey in the second week of January, a net 5.5 per cent considered current economic conditions to be good.
This was a 34-point jump from the July 2020 survey, when a net 28.6 per cent considered them bad, marking the lowest level of farmer confidence in the 12 years the six-monthly survey had been conducted.
Looking ahead, a net 43.8 per cent expected general economic conditions to worsen over the next 12 months, Federated Farmers President and commerce spokesman Andrew Hoggard said.
"That sound a bit grim, but just six months ago 58.7 per cent of survey respondents expected a deteriorating economy," Hoggard said.
"I think farmers, like other New Zealanders, are feeling buoyed by the way we've handled the pandemic despite the torpedo to international tourism. The agricultural sector is willing and able to maintain production so long as regulatory and other stumbling blocks don't trip us up."
The January survey showed the three greatest current concerns for farmers were regulation and compliance (chosen by 18.0 per cent of respondents), followed by freshwater policy (16.7 per cent), and climate change policy (13.6 per cent).
This questionnaire went out before the recent announcements by the Climate Change Commission, Hoggard said.
"As the impacts of the draft emissions budgets, and the government's reaction to them, become clearer, it will be interesting to see the results of our next survey in July."
A net 35.8 per cent of respondents reported it has been harder to recruit skilled and motivated staff, an 8-point increase from July 2020 when a net 28.1 per cent reported it had been harder.
Other key findings from the January survey:
A net 49.3 per cent of respondents reported making a profit currently, up from 46.7 per cent in July 2020.
Looking ahead, a net 18.3 per cent expected their profitability to worsen over the next 12 months, a 17-point decrease from July 2020 when a net 35.5 per cent expected it to decline.
A net 13.6 per cent of respondents expected their production to increase over the next 12 months, down from 16.1 per cent in July.
A net 11.3 per cent of respondents expected their spending to increase over the next 12 months, a 24-point increase from July 2020, when a net 12.8 per cent expected it to reduce.
Consistent with recent commodity price movements, the improvement in farmer confidence was particularly strong for dairy farmers.
Other farming groups were more cautious about current conditions and less optimistic about future conditions.
Farmers seemed most confident in the Waikato-Bay of Plenty region.