NZ Rural Confidence Report

NEW ZEALAND - Farmer confidence has increased for a second consecutive quarter, with 49 per cent of dairy farmers expecting an improvement in the agricultural economy, says a new Rabobank report.

22 December 2009

2 minute read

Oceania

The report suggests that confidence levels are not as strong in other agricultural sectors and that the condition of the NZ dollar is the biggest concern to producers.

Overall, 32 per cent of farmers expect the rural economy to improve over the next 12 months, a further increase from the 22 per cent who had that expectation in the previous quarter.

Rabobank general manager in New Zealand, Ben Russell said that while this continuing rise in overall confidence was good to see, it was being boosted by the increase in confidence in the dairy sector and was in stark contrast to some of the other commodities.

“This survey has shown some striking differences in the confidence levels between dairy and other farmers,” he said.

“The 30 per cent increase in forecast payout since the last survey will have been the major influence in the positive nature of the responses seen in the dairy sector. For many dairy farmers at the moment, improving dairy returns will be outweighing the impact of the rising NZ$, having a marked impact on their confidence levels.”

In contrast the results for sheep and beef farmers are not as positive, with only 12 per cent expecting an improvement in their own farm businesses and 21 per cent expecting the overall agricultural economy to improve.

Of those farmers surveyed who expected conditions to worsen, the rising New Zealand dollar was the biggest concern (cited by 57 per cent), while uncertainty over commodity prices was nominated by 30 per cent and overseas markets/economies by 29 per cent.

Mr Russell said commodity pricing was playing a large part in confidence levels this quarter with the majority of those expecting conditions to improve citing pricing as the main reason.

Questioned on the topic of land values, 52 per cent of farmers expected the value of their land to stay the same in the coming 12 months with 22 per cent expecting an increase and 23 per cent a decrease.

“If the world economy continues to recover at its current rate we would expect the positive indicators shown by dairy in this survey to begin to show in the other commodities in the new year. We would expect even a small drop in the New Zealand dollar to have a big impact on confidence levels across all commodities but particularly for sheep and beef,” Mr Russell said.