New Zealand sheep, beef farmer confidence drops sharply

A sharp slump in confidence among beef and sheep farmers has tempered dairy farmer optimism in the latest Rabobank confidence survey of New Zealand farmers.

Overall net confidence fell to 25% from 35% in the previous quarter, although it has now been in positive levels for the past nine months.

The number of farmers expecting the rural economy to improve in the next year fell to 39% from 48% in the previous quarter, while 42% expected similar conditions.

Sheep and beef farmer expectations dropped sharply, with almost half expecting their farm businesses to worsen.

Hayley Moynihan, Rabobank New Zealand general manager for country banking said this reflected conditions in the sector.

"Lamb prices have reached the seasonal peak, with the lucrative EU and Christmas trade now finished and returns have been around 10 percent lower than last year," she said. "While on the beef side, global prices are under pressure and the beef schedule is likely to worsen in 2017."

If the two different sectors are separated, sheep and beef farmers and dairy farmers had vastly different expectations.

Dairy farmers positive about their business rose to 67% from 57% last quarter, while a net 25% of sheep and beef farmers were pessimistic, a turnaround from the previous quarter's positive net 2% reading. Farmers in the dairy industry had the highest reading for business optimism since 2013 when the dairy boom was close to its height.

The survey sees approximately 450 farmers interviewed by an independent research agency. It has been conducted since 2003.