Thursday, April 25, 2024

Farmer confidence lifts despite Govt policy concerns

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Farmer confidence has lifted for the third time in a row on the back of the strong pricing outlook, the latest Rabobank rural confidence survey of the year has found. The latest survey – completed earlier this month – found the number of farmers expecting the rural economy to improve in the next 12 months increased from 29-32%, while the number expecting the rural economy to worsen remained at 19%.
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A total of 50% were expecting similar conditions, down from 53%.

Rabobank New Zealand chief executive Todd Charteris says the lift in farmer sentiment was being fuelled by a strong commodity pricing outlook, despite increasing concerns about aspects of government policy and the impact of labour shortages on the rural sector.

“Farmers are now marginally more positive about the prospects for the agricultural economy in the coming 12 months. And the key reason for this is rising commodity prices, with this cited by well over half of those holding an optimistic view of the year ahead,” Charteris said.

Prices were expected to remain strong moving into the second half of the year.

The lift in farmer sentiment came despite rising farmer concerns over government policy.

“Of the one-in-five farmers with a pessimistic view of the agricultural economy, 82% cited government policy as a key reason for concern. And while we’ve seen government policy feature as the major concern for farmers across recent surveys, this percentage is an increase on recent quarters,” he said.

“There are several government policies which may be causing unease among farmers, however, this spike is likely attributable to concerns linked to the recently-finalised advice from the Climate Change Commission, which could have potentially significant implications for New Zealand land-use and farming systems, including future reductions in total livestock numbers.”

He says worker shortages also remained a significant concern for farmers.

“Among pessimistic farmers, 50% cited ‘other’ reasons for expecting the performance of the agri economy to worsen, with labour shortages the most frequently mentioned factor in the corresponding verbatim responses,” he said.

“For the first time, we also asked all farmers additional questions in the survey about the impact of labour shortages on their business. In response to these, 40% of farmers said they ‘have been’ or ‘will be’ impacted by labour shortages, with this figure rising to 64% among horticulturalists.”

Charteris says farmers also indicated labour shortages were now a significantly bigger problem than 12 months ago.

“Only 3% of farmers indicated the issue had improved since last year, with 43% saying it had worsened,” he said. 

“The responses to these questions reflect the conversations we’re having with our clients on this topic and it’s clear industry leaders and the Government still have plenty of work to do to mitigate the strain of worker shortages.

“Over recent months, we’ve raised this issue with a range of government ministers and we’ll continue to highlight the feedback we’re getting from sector participants on this matter in our ongoing dialogue with the Government.”

The survey found farmers’ expectations for their own farm business performance were up on the previous quarter, increasing to a net reading of +16% from +7% in the previous quarter.

Farmers’ investment intentions were also slightly lower than in the last quarter, falling to a net reading of +11% from +13% previously. A total of 24% of farmers were expecting to increase farm investment in the coming 12 months (down from 25%) with 13% intending to decrease investment (up from 12%) and the remainder expecting to invest the same.

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