Farmer confidence lifts

Ben Russell, Rabobank New Zealand chief executive.There’s been a big rally in New Zealand sheep and beef farmers reporting a significantly improved outlook for the year ahead, though slightly more are reporting “just viable” businesses, according to the latest quarterly Rabobank Rural Confidence Survey.

The survey – completed late last month – has shown more than half of the country’s farmers (54 percent) expect the rural economy to improve over the next 12 months. This compared with just 28 percent with that expectation in the previous survey, the rural banker reports.

Just eight percent of those surveyed expected conditions to worsen (down from 29 percent in the last quarter).

Rabobank New Zealand chief executive Ben Russell said a number of factors were helping to lift farmer spirits, but particularly higher dairy commodity prices and a looming supply shortage in lamb and beef following the recent drought.

“The lower dollar has also been another cause for optimism, with 27 percent of farmers who expected conditions to improve nominating the falling dollar as the reason,” he said.

Many farmers would also be “breathing a sigh of relief” that the major difficulties of the past 12 months were behind them and feeling that conditions could only improve on what they had been.

“The severe drought that had been experienced in many parts of the country, particularly in the North Island, had really knocked farmer confidence, as had the consistently high currency and overall generally difficult economic conditions,” he said. “Many are now taking cheer that the worst of these times is past.”

While dairy farmers led the optimism in the survey, beef and sheep producers and mixed farmers also had a more positive outlook. A total of 52 percent of sheep and beef farmers expected an improvement in the agricultural economy, up from the 24 percent who had that expectation in the past survey, said Russell.

The looming shortage of lamb and beef production in the country following the 2013 summer drought was fuelling optimism among sheep and beef farmers, as this is likely to be reflected in higher farm gate prices through the 2013/14 season. “Sheep flocks around the world have contracted again and this will tighten lamb supply globally over the coming year,” he said.

New Zealand farmers were also increasingly more positive about their own business outlook, with 72 percent expecting their farm business performance to improve.

It was not all good news in the survey however, with business viability remaining an issue for sheep and beef farmers, despite their improved optimism about the agricultural economy.

Of the sheep and beef farmers surveyed, 53 percent considered themselves just viable or unviable. This was slightly higher than the number with that view last quarter – 50 percent.

Conducted since 2003, the Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.

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