Government policy and rising farm costs have seen farmer confidence plummet to a 20-year low, according to a Rabobank Rural Confidence Survey.
Farmers from all sectors are now significantly more pessimistic about the prospects for the broader agri economy, and a cocktail of concerns is weighing heavily on them, said Rabobank New Zealand chief executive Todd Charteris.
“As with recent surveys, rising farm input costs and government policy were the two major reasons cited by farmers with a pessimistic outlook for the year ahead,” he said.
Rising interest costs and falling commodity prices are also adding to the anxiety.
Farmers’ confidence in their own farm business performance fell sharply and is now also at a record low.
The fourth and final survey of 2022 – completed late last month and involving about 450 farmers – found farmer confidence was significantly down on the previous (September) quarter, with the net confidence reading slumping to -71%, from -31%.
That figure is the lowest in the 20-year history of the survey and far exceeds the previous low of -45% recorded amid the dairy downturn in 2015.
Charteris said the latest survey shows the number of farmers expecting conditions in the agricultural economy to improve in the coming 12 months has fallen to 4% (from 12% in the previous quarter) while the percentage expecting conditions to worsen rose to 75% (up from 43%).
Concern over government policy is likely to be tied to the government’s proposed framework for pricing agricultural emissions released in October.
“This proposal has caused significant angst among primary producers with many believing it unduly penalises farmers and the communities in which they live and work,” he said.
The government’s announcement at Fieldays that it plans to revisit sequestration policy was made after the survey closed and is not reflected in the results.
“Since the last survey, we’ve seen the official cash rate rise by 125 basis points, which has increased interest costs and further squeezed farmer margins. Over this period, we’ve also seen agri commodity prices pull back as global markets react to growing recessionary fears,” he said.
“And all these factors have combined to drain farmer sentiment and leave it deep in the doldrums as we move towards the end of the year.”
Charteris said Rabobank will be keeping in contact with its clients over coming months to support them as they navigate the host of challenges facing the sector.
