Farmer con­fi­dence falls fur­ther in quar­ter

Otago Daily Times - - BUSINESS & MONEY - SALLY RAE

FARMER con­fi­dence has slipped fur­ther into neg­a­tive ter­ri­tory.

Rabobank’s ru­ral con­fi­dence sur­vey fell for the third con­sec­u­tive quar­ter, on con­cerns over Gov­ern­ment pol­icy, fall­ing com­mod­ity prices, over­seas mar­kets/ economies and ris­ing in­put costs.

Sen­ti­ment was down among dairy farm­ers and sheep and beef farm­ers but rose among hor­ti­cul­tur­ists.

More farm­ers in both sec­tors were ex­pect­ing con­di­tions in the agri­cul­tural econ­omy to worsen in the com­ing year than those who were ex­pect­ing an im­prove­ment.

That was the first time that had been seen since the first quar­ter of 2016 and it was par­tic­u­larly un­usual dur­ing a pe­riod where prod­uct prices were at good lev­els and the cli­mate had gen­er­ally been favourable for most pro­duc­ers, Rabobank New Zealand gen­eral man­ager for coun­try bank­ing, Hay­ley Gourley, said in a state­ment.

Rather than one sin­gle fac­tor driv­ing con­fi­dence lower, the sur­vey re­sults in­di­cated a range of fac­tors were re­spon­si­ble.

The pro­por­tion of farm­ers cit­ing Gov­ern­ment pol­icy as a rea­son for a neg­a­tive outlook was rel­a­tively un­changed since the last quar­ter.

How­ever, there had been a jump in the num­ber of farm­ers flag­ging con­cerns over fall­ing com­mod­ity prices, ris­ing in­put costs and over­seas mar­kets.

Dairy farm­ers were chiefly be­hind the in­creased con­cerns around com­mod­ity pric­ing while both dairy and sheep and beef farm­ers were now con­sid­er­ably more wor­ried about ris­ing farm in­put costs.

Al­most half of those dairy farm­ers ex­pect­ing con­di­tions to worsen cited fall­ing com­mod­ity prices as a key fac­tor.

That was likely to have been driven by lower pric­ing at re­cent Glob­alDairyTrade events and Fon­terra’s down­ward re­vi­sion of its 2018­19 fore­cast farm­gate milk price in Oc­to­ber.

The sur­vey was com­pleted last month and Fon­terra this week cut its fore­cast again from a range of $6.25­$6.50 to $6­$6.30.

Dairy farm­ers and sheep and beef farm­ers were also more con­cerned about ris­ing farm in­put costs, which had in­creased over re­cent months as a re­sult of spi­ralling global urea prices, lo­cal prices hav­ing in­creased to $165 a tonne, Ms Gourley said.

Com­ments col­lected in the sur­vey sug­gested Fon­terra’s re­cent per­for­mance is­sues and My­coplasma bo­vis were fur­ther ar­eas of con­cern.

In con­trast, 34% of hor­ti­cul­tur­ists were now ex­pect­ing their own busi­ness per­for­mance to im­prove in the next 12 months, up from 26% last quar­ter, while the num­ber ex­pect­ing per­for­mance to worsen fell from 15% to 10%.

Over­seas de­mand for New Zealand’s hor­ti­cul­tural prod­ucts re­mained strong, while the con­clu­sion of the Com­pre­hen­sive and Pro­gres­sive Trans Pa­cific Part­ner­ship (CPTTP) was a fur­ther re­cent boost for hor­ti­cul­tural ex­porters, she said.

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