Confidence on the rise for most farmers

Farmers in general feel optimistic about the economy. Photo/Thinkstock

Farmers are generally optimistic at the mid-point of the 2013/14 season, according to Federated Farmers' latest Farm Confidence Survey. 871 farmers took part in the six-monthly survey which asks for farmers views of the general economy, prospects for their own businesses, and their big issues of concern.
Farm incomes are a function of farmgate prices and production. Given that commodity prices are high, especially for dairy products, and weather conditions kinder than this time last year, it is no surprise that more farmers are feeling more optimistic about their own prospects for the year ahead, although the improvement for meat and fibre is only slight.
As with the last survey the overall results mask both industry and regional variations. Dairy farmers are the most optimistic across all the indicators. However, the lack of a meaningful lift in profitability for meat & fibre is concerning following the difficulties these farmers faced in 2013. This is giving further impetus for reform of the meat industry.
Like other businesses and consumers, farmers also feel optimistic about the general economy, although the number expecting further improvement has fallen slightly compared to six months ago. It is notable that a number of farmers have expressed concern in this survey about the prospect for higher interest rates and political uncertainty. Both could be seen as making the economic environment more challenging.
After lagging behind sentiment levels in the July 2013 survey, prospects for on-farm spending have caught up in this survey. In part this will be a reflection of general optimism about farm incomes, but inflation of input prices is also a concern for some farmers.
Most farmers remain cautious about their debt, with little change in the proportions of farmers expecting to increase, reduce, or hold debt at current levels.
The agricultural labour market remains tight with farmers' difficulty finding skilled and motivated staff at a similar level to this time last year.
Regulation and compliance costs remain the biggest issue of concern for farmers. This is particularly the case for dairy farmers grappling with the implications of new or proposed regional council policies and plans for water quality and water allocation. Among Meat & Fibre respondents there remains widespread disillusionment and frustration with the state of the meat industry. Farmers' highest priority for the Government remains fiscal policy; that is, a return to surplus, containing or reducing government spending, and/or reducing government debt. This is followed by reducing the costs of regulation and compliance.