Grow­ers feel op­ti­mistic

De­spite in­creas­ing con­cerns over the health of the broader agri­cul­tural econ­omy, hor­ti­cul­tur­al­ists' ex­pec­ta­tions for the per­for­mance of their own busi­nesses in the com­ing 12 months re­main strong, the lat­est Rabobank Ru­ral Con­fi­dence Sur­vey has shown.

NZ Grower - - Contents - “Ninety-two per­cent of hor­ti­cul­tur­al­ists view their own busi­ness as “vi­able” or “eas­ily vi­able” which is up by 10 per­cent on last quar­ter

Results at a glance

• Hor­ti­cul­tur­al­ists have strong ex­pec­ta­tions for their own busi­ness per­for­mance with con­fi­dence in the sec­tor con­tin­u­ing to hold at el­e­vated lev­els

• How­evr, their out­look on the broader ru­ral econ­omy fell sig­nif­i­cantly in the last quar­ter and net con­fi­dence there is now in neg­a­tive ter­ri­tory

• In­vest­ment in­ten­tions among hor­ti­cul­tural pro­duc­ers edged marginally higher

• The vast ma­jor­ity of hor­ti­cul­tur­al­ists view their own farm busi­ness as “vi­able” or “eas­ily vi­able”.

The lat­est sur­vey – com­pleted last month - found the num­ber of New Zealand hor­ti­cul­tur­al­ists ex­pect­ing their own farm busi­ness per­for­mance to im­prove in the year ahead had risen to 54 per­cent % of those sur­veyed (com­pared with 48 per­cent % in the pre­vi­ous quar­ter) – although those ex­pect­ing the per­for­mance of their busi­ness to worsen had also risen (to eight per­cent from two per cent pre­vi­ously). While 38 per cent of re­spon­dents ex­pected busi­ness per­for­mance to re­main sta­ble.

This saw net con­fi­dence in their own busi­ness per­for­mance re­main un­changed among hor­ti­cul­tur­al­ists from the pre­vi­ous quar­ter at +46 per cent.

RaboRe­search hor­ti­cul­tural an­a­lyst Hay­den Hig­gins said a range of fac­tors were con­tribut­ing to hor­ti­cul­tur­al­ists’ op­ti­mistic view on the out­look for their own busi­nesses.

‘We’ve seen pos­i­tive broad-based re­turns, as well as in­creas­ing de­mand from over­seas mar­kets for a range of hor­ti­cul­tural prod­ucts, and this is driv­ing hor­ti­cul­tur­al­ists’ be­lief that their own busi­nesses will per­form strongly over the com­ing year,” he said.

While hor­ti­cul­tur­al­ists’ ex­pec­ta­tions for their own op­er­a­tion were hold­ing firm at el­e­vated lev­els, Mr Hig­gins said there had been a sig­nif­i­cant slide in their out­look for the broader ru­ral econ­omy. “The num­ber of hor­ti­cul­tur­al­ists ex­pect­ing the broader agri­cul­tural econ­omy to im­prove over the next 12 months fell to 23 pe­cent com­pared to 39 per­cent last sur­vey, while 32 per­cent ex­pect the broader agri­cul­tural econ­omy to worsen, up from five per­cent last sur­vey,” he said.

“This sent the net read­ing plum­met­ing from +35 per­cent in March to –nine per­cent this sur­vey – the first neg­a­tive net re­sult since early 2016.”

Mr Hig­gins said the sur­vey found con­cerns over My­coplasma bo­vis were the chief con­trib­u­tor to this fall.

“As was the case with farm­ers from the dairy and sheep and beef sec­tors, the pre­dom­i­nant rea­son cited by hor­ti­cul­tur­al­ists who ex­pect the agri econ­omy to worsen is the im­pact of My­coplasma bo­vis and the con­se­quences of the erad­i­ca­tion process.”

Other fac­tors con­tribut­ing to hor­ti­cul­tural pro­duc­ers’ pes­simistic view of the broader agri econ­omy were gov­ern­ment poli­cies and ris­ing in­put costs.

While less pos­i­tive about the broader agri econ­omy, the sur­vey found hor­ti­cul­tur­al­ists con­tinue to have strong in­vest­ment in­ten­tions for their own busi­nesses.

The num­ber of hor­ti­cul­tural pro­duc­ers ex­pect­ing to in­crease in­vest­ment in their farms in the next year rose to 44 per­cent (from 42 per­cent pre­vi­ously) while those ex­pect­ing to re­duce in­vest­ment in­creased to three per­cent (two per­cent pre­vi­ously). These move­ments pushed the net read­ing marginally higher to +41 per­cent from +40 per­cent last quar­ter.

As well as in­creased in­vest­ment in­ten­tions, Mr Hig­gins said, the sur­vey also found there had been a lift in the num­ber of hor­ti­cul­tur­al­ists as­sess­ing their busi­nesses as “vi­able” or “eas­ily vi­able.”

“Ninety-two per­cent of hor­ti­cul­tur­al­ists view their own busi­ness as “vi­able” or “eas­ily vi­able” which is up by 10 per­cent on last quar­ter and is the high­est per­cent­age recorded since this sur­vey ques­tion was in­tro­duced in early 2009,” he said.

“This re­sult is a fur­ther re­flec­tion of the good re­turns that have been re­ceived by hor­ti­cul­tur­al­ists in re­cent sea­sons and the healthy con­fi­dence among in­dus­try par­tic­i­pants.”

Con­ducted since 2003, the Rabobank Ru­ral Con­fi­dence Sur­vey is ad­min­is­tered by in­de­pen­dent re­search agency TNS, in­ter­view­ing a panel of ap­prox­i­mately 450 farm­ers each quar­ter. The last sur­vey in­cluded re­sponses from 59 hor­ti­cul­tur­al­ists.

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