Farmer confidence in the agricultural-based economy has risen strongly and is back at positive levels for the first time since late 2021, a bankers says.
In a statement, Rabobank chief executive Todd Charteris said following a small dip in the June quarter, the latest Rabobank Rural Confidence Survey showed farmer confidence in the broader agricultural economy had increased to a net reading of 3% from -25%.
"The country’s farmers and growers are doing a great job and are rightly recognised as some of the world’s most efficient food producers. The agri sector makes such a vital contribution to New Zealand’s overall economy, so it’s great to see such a healthy lift in sentiment since our last survey."
The survey, which was completed earlier this month, found the number of farmers expecting the performance of the broader agricultural economy to improve in the year ahead had doubled since last quarter to 30%, while the number expecting conditions to worsen had fallen to 27% (from 40%). The remaining 41% of farmers expected conditions to stay the same (44% previously).
The arrival of spring had brought with it a lift in primary producer sentiment. Farmers across all sector groupings were now more upbeat about the year ahead, Mr Charteris said.
"Across the previous 10 surveys, pessimism has been the dominant sentiment, so it is really encouraging to see net confidence on the up and back in net positive territory – even if only just, with more farmers positive than negative about the 12 months ahead," he said.
Mr Charteris said farmers anticipating a better year ahead cited higher commodity pricing (40%) and falling interest rates (31%) as the two major reasons for expecting conditions to improve.
He said since the last survey in June, global dairy prices were continuing to trend upwards, culminating in Fonterra lifting its milk price forecast by 50 cents to a mid-point of $8.50kg/MS in late August.
Beef prices continue to soar, while sheepmeat prices have inched upwards as the new season approaches.
"In addition, farmers have been buoyed by the RBNZ’s decision to lower the OCR (official cash rate) by 25 basis points in August and with further rate cuts expected over the months ahead, we’ve seen bank interest rates fall significantly across recent months."
Among farmers holding a pessimistic view of the 12 months ahead, the survey found, rising input prices (48%) continued to be the major source of concern.
The survey found farmers’ expectations for their own farm business operations were up across the board.
Mr Charteris said farmers were now much more upbeat about the prospects for their own businesses. The net reading on this measure lifting to +18% (from -1%).
Dairy, sheep and beef and horticulture recorded net positive readings, he said.
"We have to go all the way back to quarter three in 2021 for the last time this happened."
The survey found dairy farmers and sheep and beef farmers were now much more optimistic about their own businesses than in June.
Dairy farmers were now the most optimistic of all the sector groupings, with 42% expecting the performance of their own business to improve in the next 12 months and less than one in 10 expecting it to worsen, he said.
There was also a strong lift from sheep and beef farmers on this measure, up to a net reading of +6% (from -17%).
Growers recorded a more modest lift: +29% from +26% last quarter.
While the percentage of farmers self-assessing their own operations as "unviable" was largely unchanged from last quarter (8% from 7% previously), Mr Charteris said there had been an upward movement at the other end of the scale.
"We’d hoped to see the percentage of farmers assessing themselves as ‘unviable’ drop a bit lower and the fact we’re still seeing this number at a stubbornly high 8% does reflect the really challenging environment primary producers have faced over the last couple of years," he said.
Mr Charteris said it was good to see an uptick in the percentage of farmers viewing their own businesses as "viable" or "easily viable", with this rising to 55% from 48%.
Farm investment intentions crept up with 19% of farmers expecting investment to increase in the next 12 months (14% last quarter), and only 17% expected it to reduce (23% previously).
