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.
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.