Surge in farmer confidence
Farmer confidence has risen to the highest level since early 2018, driven by strong commodity prices, the latest Rabobank Rural Confidence survey shows.
Confidence in the broader agricultural sector has risen sharply, especially among dairy, and sheep and beef farmers.
It was the second consecutive lift in sentiment, after a rise in the last quarter of last year, pushing overall net confidence back into positive territory, meaning more farmers were feeling optimistic than pessimistic. Before this, a run of 10 surveys had shown negative sentiment.
Improved commodity prices were the key reason farmers gave, but concern over Government policy remained their largest worry.
Pastoral farmers were more optimistic about their businesses, while horticultural businesses were more pessimistic.
The survey was completed last month and found that net confidence among farmers rose to +10 per cent, up from -23 per cent in early December.
The number of farmers expecting conditions to improve in the next year rose 29 per cent, up from 16 per cent last quarter, and fewer farmers – 19 per cent compared with 39 per cent previously – thought things would worsen. Those expecting the sector’s economic performance to stay the same rose slightly from 44 per cent to 49 per cent.
Rabobank New Zealand chief executive Todd Charteris said farmers across all groups were more buoyant about the outlook for the agricultural economy.
Dairy prices jumped 15 per cent early last month, driven by demand for whole milk powder and butter before the season came to an end.
Charteris said global dairy trade prices had risen by 20 per cent. The survey began just after the 15 per cent jump earlier last month and after Fonterra lifted the midpoint for its pay-out forecast to $7.60 for the current season.
There had been encouraging news for sheep and beef farmers too, he said.
‘‘Commodity prices for red meat products haven’t fared as well as dairy prices. But demand from our key markets has held up much better than expected in the first quarter of the year. Chinese demand led the charge as our major market continues its post-Covid-19 recovery.’’
Those farmers still feeling pessimistic said their main concern was Government policies.
Horticulturalists were feeling downbeat after labour shortages began to bite over recent months, Charteris said.
Investment intentions were marginally better than in the last quarter, with 25 per cent of farmers planning to increase investment over the next year, and 12 per cent expecting it to decrease, the survey showed.
There had been a notable jump in investment intentions among dairy farmers. Three in 10 were now looking to increase investment.
The horticulture sector’s investment intentions remained the strongest, with more than one-third looking to increase investment in the next 12 months, he said.
Beef and Lamb New Zealand also highlighted the sector’s resilience in the aftermath of Covid-19 this week, as global demand for protein remained strong.
An increase in meat consumption in emerging markets and growing demand from China were bolstering the sector, Beef and Lamb chief economist Andrew Burtt said.
A recovering food service sector should continue to increase demand, but farm gate returns could still be affected by continued disruptions and increased costs across the supply chain, he said.
Total beef, veal and sheep meat export revenue for the year ending September was forecast at $7.43 billion, down 13 per cent from last year.
The decline was largely driven by the unpredictable global trade environment, the strength of the New Zealand dollar, a decline in volumes for export as livestock numbers were rebuilt following drought, and some softening in prices.
Beef and Lamb chief executive Sam McIvor said it was a testament to the red meat sector’s agility.