Friday, April 19, 2024

Rural confidence rises from rock bottom

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Federated Farmers remain optimistic as new survey results show growing farmer confidence, despite challenging times.
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By Wayne Langford, Federated Farmers president

Farm confidence has recovered from last year’s record lows but high interest rates, poor commodity prices, and regulatory costs are weighing heavily on farmers.

The latest Federated Farmers Farm Confidence Survey shows there’s been a positive shift in the rural mood, but confidence is still languishing in historically low territory.  

“It’s good to see the first improvement in farmer confidence for quite some time now,” Federated Farmers national president Wayne Langford says. 

“I want to be clear, though, that it’s only a slight improvement on the last survey in July 2023, when we saw farmer confidence plummet to an all-time low. 

“Things are up, but we’re coming off a very low base. I wouldn’t say farmers are feeling more confident yet – they’re just feeling less unconfident.”

Langford says farmers are struggling with high inflation, high interest rates and lower commodity prices, and the impact that’s having on their profitability.

“Most farmers are still feeling that general economic conditions are bad, and most are still making a loss.

“Where we are seeing a shift is in the number of farmers who expect things will improve in the next 12 months. So, times are tough, but there’s a sense of cautious optimism.”

Compared to last July, the January survey shows more farmers expect their production and spending to increase, and fewer farmers expect their debt to increase, in the 12 months ahead. 

Langford says there are a number of drivers behind the confidence recovery. 

“Inflation seems to be slowing, interest rates are softening, and commodity prices – at least for dairy – seem to have stabilised.

“We’ve also seen a change of Government in the last six months, with a real commitment to roll back some of the more impractical and expensive regulation that’s undermined farmer confidence.”  

He’s optimistic this is the start of a genuine, steady increase in confidence. 

“I think it is and I think Federated Farmers can help with that because we’re working hard with the new Government to reduce the burden on farmers, like fixing unworkable freshwater rules.

“It’s all about cutting that red tape, making compliance on-farm easier, and getting our primary sector humming again.”

Tim Dangen, a beef farmer on Auckland’s west coast and the 2022 Young Farmer of the Year, says farmers are in “knuckle-down phase” and “weathering the storm” but he’s sensed the shift in rural confidence. 

“I think farmers in general have started to adjust to the change in the climate. 

“We’re slowly becoming more used to it, and the change in Government has helped too with some of the regulatory load.” 

Dangen, a 2024 Zanda McDonald Award finalist (winner announced March 11-13), says the tight times have forced farmers to scrutinise their own businesses and find efficiencies. 

“In our personal farming situation, we’ve pulled everything apart and pulled it apart again, and we’ll continue to do so for the next 12 months. It’s just about making those adjustments.

“We know that once we get through this period, then ultimately what we’ll come out with will be a more efficient business – and that excites me.”

His main concern is around how long the economic downturn could last. 

“How long are we going to be in this zone for? Even six months ago we would have thought our interest rates might be coming back by the end of 2024, whereas now that sort of seems like it’s out the window. 

“If we’re lucky, we’ll be status quo by the end of the year.”

The survey identified farmers’ biggest concerns right now as: debt, interest and banks; farmgate and commodity prices; regulation and compliance costs; and climate change policy and the ETS. 

Langford’s not surprised to see interest rates came out as the top concern. 

“I’ve spoken to a lot of farmers who are getting work off-farm just to make ends meet. It’s exactly why Federated Farmers have been calling for an independent inquiry into rural banking.

“Farmers need to know why the banks are charging them so much more in interest than residential borrowers. An inquiry would provide that transparency.”

He encourages struggling farmers to reach out for help.

“Even though we’re talking about a slight confidence lift, it’s still extremely tough for farmers out there, so please reach out to the likes of Rural Support Trust if you need help.” 

See the January 2024 Federated Farmers Mid-Season Farm Confidence Survey results at fedfarm.org.nz/FarmConfidence

More: Listen to Wayne Langford and Tim Dangen discuss the state of rural confidence in episode four of the Federated Farmers Podcast, released March 11 at fedfarm.org.nz/podcast

Federated Farmers, New Zealand’s leading independent rural advocacy organisation, has established a news and insights partnership with AgriHQ, the country’s leading rural publisher, to give the farmers of New Zealand a more informed, united and stronger voice. Feds news and commentary appears each week in its own section of the Farmers Weekly print edition and online.

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