Rabobank New Zealand chief executive Todd Charteris says while there has been a lack of movement in the overall confidence among New Zealand farmers, there had been upward swings in some farming sectors, most notably dairy.
New Zealand farmer confidence ends 2021 with an even split of farmers expecting the agricultural economy’s performance to improve next year and those expecting it to worsen.
Rabobank’s final Rural Confidence Survey of the year found the number of farmers expecting conditions in the agricultural economy to improve in the coming 12 months had risen to 28% (up from 23% in the last quarter), while there were also more farmers expecting conditions to worsen (27% from 23% previously).
The number of farmers expecting the performance of the agricultural economy to stay the same fell to 43% (from 52% previously).
Rabobank NZ chief executive Todd Charteris says the lack of movement in the overall confidence reading masked sizable swings in sentiment within specific sectors.
“In this survey we’ve seen dairy farmer confidence about the broader agri-economy rebound strongly after a drop in quarter three, however, this has been offset by reduced confidence among both sheep and beef farmers and horticulturalists,” Charteris said.
The survey found dairy farmer confidence in the economy was up to a net reading of +12%, while sheep and beef farmers fell to a net reading of -1% (+7% in the last quarter) and growers to -10% (+2% previously).
“Dairy farmer confidence has lifted off the back of the upward pricing trend at recent Global Dairy Trade events, which has seen global dairy commodity prices reach levels not seen in 2014,” he said.
“The recent lift in the Fonterra milk price forecast came outside the survey period – and is therefore not reflected in the results – however, this will only have further buoyed sentiment among dairy farmers who are now looking at a record high milk price for the current season.”
While pricing for NZ’s red meat and horticulture products remains robust, Charteris says confidence among sheep and beef farmers and growers was being dragged lower due to a range of farmer concerns.
“The lower sentiment among sheep and beef farmers is being driven by concerns over government policy – with this cited by 85% of dry stock farmers with a negative outlook – while horticulturalists are now less positive due to a host of issues, including rising input costs, labour shortages and supply chain disruption,” he said.
The survey found farmers’ confidence in their own farm business performance was marginally down, with 28% of farmers now expecting the performance of their own farm business to improve, 22% expecting business conditions to worsen (17% previously) and 49% expecting conditions to stay the same (down from 54%).
In line with the survey results for the broader agri economy, dairy farmers were significantly more confident about the prospects for their own farm performance over the next 12 months, while dry stock farmers and growers were less positive.
Charteris says the latest survey included additional questions related to labour shortages and the level of impact these were having on farmers businesses. The results confirmed these shortages continued to be a key challenge for the sector.
“Forty percent of farmers said they have been affected by labour shortages or expect they will be in the coming year and, of these, more than a third said they expected the impact on their business to be significant,” he said.
The survey found horticulturalists were the most severely impacted by this issue, with close to two-thirds saying labour shortages had already affected their business or were expected to over coming months.
The survey also found farm business investment intentions were marginally higher than in the last quarter, with 27% of farmers now planning to increase investment over the next year and only nine % expecting investment to decrease.
The Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of 450 farmers each quarter.
