Farmer confidence falls over drought, government policy fears
AUCKLAND: New Zealand farmer confidence tumbled in January as a drought and uncertainty over new government policies took their toll.
A net 34% of those surveyed were pessimistic about general economic conditions over the next 12 months, a marked deterioration from 16% who were optimistic in July, according to the latest new season Federated Farmers’ Farm Confidence January survey.
Within the different industry groups, 43% of dairy farmers said they now expect general economic conditions to worsen over the next 12 months versus 5.8% in July, 34% of meat and fibre farmers are expecting the same, versus 12% in July, while 47% of arable farmers are expecting a deterioration, versus 12% in July.
The farmer confidence echoes the business sentiment surveys showing growing pessimism about the country’s economic fortunes under a new administration, triggering Finance Minister Grant Robertson to acknowledge the mood at a select committee hearing last month and say ministers are seeking to allay those concerns.
‘‘Pretty much all recent surveys of businesses have found a drop in confidence because of the disruption and uncertainty over October’s general election. And in midJanuary, when our survey was done, farmers in many regions had endured weeks and weeks of little or no rain,’’ Federated Farmers vicepresident Andrew Hoggard said.
On farmer profitability, 54% said they are generating a profit, 35% were breaking even and 9.3% were running at a loss. In July, 55% were profitable, 34% breaking even and 9.6% running at a loss.
However, a 3.7% were now pessimistic about farm profitability over the next 12 months versus 39.4% who were optimistic in July.
Regarding farm debt, 91% had debt in January compared to 88% in July. Only 37% of all farms carrying debt expect that to reduce in the latest survey versus 51% in July. The proportion of farms expecting their debt to increase rose to 15% from 9.6% over the same time period.
Similar to the July 2017 survey, the greatest concern for farmers was regulation and compliance costs. The dry weather was also on their minds, and worry about climate change policy and the potential for livestock emissions to be included in the emissions trading scheme showed a marked increase, Hoggard said.
Also, compared to previous years, biosecurity concerns such as pests and diseases is more evident and at the highest level ever seen in these surveys.
‘‘The cattle disease Mycoplasma bovis is the likely culprit,’’ Federated Farmers said.
The ability to recruit staff is becoming increasingly difficult — the hardest in the 18 surveys that have been carried out since 2009.
‘‘The labour market is tight, with low unemployment and high labour force participation, and recent restrictions to immigration policy appear to be exacerbating the problem,’’ according to Federated Farmers.
The January online survey received 1070 responses from farmers in four industry groups, over 24 provinces.