Confidence still low but improving
Farmers feel more comfortable with Government’s direction, bank says
The first Rabobank Rural Confidence Survey of 2024 has found New Zealand farmer sentiment continues to surge, rising strongly for the second consecutive quarter.
Confidence remains low overall, with more farmers expecting the performance of the broader agri economy to worsen in the coming year, than those expecting it to improve.
However, confidence is now markedly higher than in September last year when it slumped to its lowest reading in the survey’s 20 years.
The latest survey found farmer confidence in the agri-economy was up to a net reading of -16 per cent from -47 per cent.
The survey found 38 per cent of farmers were expecting conditions in the broader agricultural economy to worsen over the next 12 months (down from 58 per cent last quarter) with 22 per cent expecting conditions to improve (from 11 per cent).
The remaining 39 per cent expected conditions to stay the same (29 per cent previously).
Rabobank chief executive Todd Charteris said it was pleasing to see farmer confidence continuing to move in the right direction.
“Confidence is still well back on where we’d like to see it, but it is encouraging to see overall sentiment improving.”
Charteris said that, among farmers with an optimistic outlook, government policy was the major factor cited for holding this view (nominated by 28 per cent).
“While a smaller percentage of farmers credited government policy as a reason for optimism than in last quarter, it does seem clear that primary producers are more comfortable with the direction of government policy under the new coalition Government than they had been under the previous administration,” he said.
Charteris said other reasons for optimism included rising commodity prices (20 per cent) and overseas markets and economies (17 per cent).
Among those expecting conditions to worsen, the survey found rising input costs (63 per cent) continued to be the major source of concern. This was unsurprising, he said. “Since our last survey in December last year, we’ve seen prices for key farm inputs remain stubbornly high.
“We’ve also seen an escalation of tensions in the Red Sea region which has the potential to impact trade logistics and push prices for imported goods even higher.”
Falling commodity prices (45 per cent) and rising interest rates (42 per cent) were the next most significant concerns among primary producers with a pessimistic outlook.
Own performance
The survey found farmers’ expectations for their own farm business operations were also higher than last quarter, with the net reading lifting to -9 per cent from -31 per cent.
Charteris said farmers across all sectors were now more positive about the prospects for their own businesses, with horticulturists continuing to be the most optimistic and sheep and beef farmers the least.
He said growers’ net reading on this measure rose to +22 per cent.
“They continue to remain upbeat about the year ahead, off the back of a strong season for most horticultural products and robust overseas demand for their products.”
Charteris said dairy farmers were also now “considerably” more positive than last quarter (up to a net reading of +5 per cent from -20 per cent previously).
Confidence is still well back on where we’d like to see it, but it is encouraging to see overall sentiment improving.
— Todd Charteris, Rabobank