Farmers nervous over the future

Farmer confidence has taken a dent in the last three months, mainly at the prospect of new policies of the coalition Government.

While it has not fallen dramatically, confidence is not at the all time high levels of earlier this year, when farmers reported to Rabobank the highest feel good factor since the bank’s surveys began in 2003.

Still, more farmers expect the rural economy to improve than to worsen, although the overall reading dropped sharply to a net confidence measure of 13 per cent from 38 per cent last survey.

Rabobank general manager for country banking, Hayley Moynihan, said its latest survey found farmers’ more pessimistic outlook centred on concerns about the recent change in government.

‘‘For those farmers who thought the rural economy will worsen over the next 12 months, government policies were cited by 80 per cent as a key reason for holding this view.’’

The other key reasons cited by farmers who were expecting agricultural conditions to worsen were rising input costs (20 per cent) and falling commodity prices (15 per cent).

Among farmers expecting conditions to improve, two-thirds

While it has not fallen dramatically, confidence is not at the all time high levels of earlier this year.

said rising commodity prices were a reason for holding this view, while 27 per cent cited the decreasing New Zealand dollar.

By sector horticulturalists expressed the most pessimism, during a period when sales of gold kiwifruit orchards reached the $1 million per hectare mark. Farmers did not expect their farms would perform as well, with dairy farmers and horticulturalists significantly less positive. Dairy farmers’ concerns were related to lower milk prices.

Investment intentions were also down marginally, with horticulturalists recording the largest drop of any sector group.

The survey – completed last month – found the number of farmers expecting the rural economy to improve in the next 12 months had fallen to 29 per cent (down from 46 per cent last quarter), 49 per cent were expecting similar conditions (up from 42 per cent) and the number expecting the rural economy to worsen rose to 16 per cent (up from 8 per cent).

The 25 per cent reduction in net confidence is the largest drop in one quarter since March 2016 and, combined with the decline in sentiment recorded in the previous quarter, represents a 41 per cent fall in New Zealand rural confidence since the record high reached in June’s survey (net confidence of +54 per cent).