More than half of sheep and beef farmers are now reporting they are expecting the agricultural economy to improve in the next 12 months, says rural banker Rabobank.
The latest quarterly Rabobank Rural Confidence Survey, which was completed late last month, has showed that New Zealand farmers are increasingly optimistic about the outlook for their own enterprises and for the overall agricultural sector.
More than half (56 percent) of sheep and beef farmers reported they were expecting the agricultural economy to improve in the next 12 months, up from 52 percent last quarter.
The number of sheep and beef farmers expecting their own business performance to improve also increased, to nearly half (49 percent), climing from 45 percent.
Rabobank NZ chief executive Ben Russell says that improving commodity prices were buoying the red meat sector, with lower stock numbers – particularly less availability of lambs – following last summer’s drought contributing to the positive outlook for commodity prices among farmers.
“At the start of the new processing season, farmgate prices are two to three percent ahead of the prior year for lamb,” says Russell.
“Sheep and beef farmers’ investment intentions have shown the greatest improvement,” Russell said. “A total of 95 per cent of farmers in this sector reported they intended to maintain or increase investment in their businesses. This was up from 91 per cent last survey and from more than 83 per cent 12 months ago.”
“Importantly, sheep and beef farmers’ assessment of their own viability has increased to 54 per cent (up from 48 per cent previously), pushing back into net positive territory for the first time in 2013,” he said.
After registering a large rally last quarter, confidence in the overall rural economy remained at high levels, with 54 percent of farmers expecting conditions to improve over the next 12 months (the same as the last survey), and only six percent expecting them to worsen (down from eight percent).
Ben Russell said that while Spring is typically the time farmer confidence was at its highest, the current favourable climatic conditions, combined with improving product returns across most agricultural sectors, had increased confidence even further this year.
Dairy farmer confidence had remained at similar elevated levels to the previous survey, in the wake of a record milk price forecast for the current season and generally very good spring conditions lifting milk production.
Conducted since 2003, the Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.