A milk tanker leaves Fonterra's Te Rapa dairy factory. Photograph by Christine Cornege.
Looking back the recently concluded 2013/14 season was a very good one for most farming sectors in most regions.
Supply and demand factors made for very high world prices for most agricultural commodities, which delivered New Zealand its highest terms of trade since 1974.
And unlike 2012/13's drought-affected season, 2013/14
was also a good one for production, with milk production setting a new high.
Exports were up 12 per cent for the year to June, delivering a trade surplus and reducing the current account deficit.
The downside was a high exchange rate which meant the increases in world prices were not fully passed on to farmers.
Nevertheless, Fonterra's milk price was still up 40 per cent on the previous season and farmgate sheepmeat and beef prices were also up.
A good year for farming meant more spending in the regions, especially where there is a strong dairy presence.
The Christchurch rebuild drove construction activity and boosted manufacturing of building materials and historically low interest rates with positive net migration helped push up retail spending and the property market.
Employment grew by 82,000 for the year to June and unemployment fell to 5.6 per cent.
Consumer and business confidence were both very strong and GDP is estimated to have grown this year by around 4 per cent.
All this positive economic news doesn't mean that our skies are cloud-free. The same supply and demand factors that took world dairy prices into the stratosphere have reversed to bring them back down to earth again with a thud.
Current export data reflects past production and pricing so we'll see a deteriorating trade position over the coming months and with it falls in agricultural revenue.
We've seen Fonterra slash its milk price forecast which will be a $4 billion hit to dairy farmers' wallets and will flow on to regional economies through reduced farm spending in towns and cities.
However, we must put all this into context and remember that its 2014/15 forecast of $6 per kgMS is still higher than 2012/13's $5.84.
The exchange rate was slow to respond to the initial falls in dairy prices, in part due to being masked by other strong economic data, but also because attention was on the Reserve Bank's increases in its Official Cash Rate which began in March.
The exchange rate has come back since Fonterra cut its payout forecast and it is expected to fall further as the trade position weakens.
On the positive side international prices have been better for sheep and beef, with international lamb prices up 20 per cent on a year ago.
With sheep numbers falling below 30 million for the first time in 70 years tight supply means prices are likely to remain elevated. If the NZ Dollar falls further sheep and beef farmers can expect to have higher incomes, provided they get some good conditions for production.
However, all farmers will need to plan for higher input prices, rising interest rates and the potential for adverse weather.
Statistics NZ's June Quarter Farm Expenses Price Index showed a pick-up in farm input inflation to an annualised 3.4 per cent, mainly due to higher prices for electricity and livestock purchases, as well as higher interest rates.
On the subject of interest rates, with agricultural debt approaching $53 billion, a one per cent change in average lending rates is worth $500 million to farmers and this before the less direct influence interest rates have on the exchange rate.
While understanding the need for the Reserve Bank to act to keep inflation genie in the bottle, Federated Farmers welcomed its recent decision to take a pause in its OCR increases.
However, unless there is a major economic slowdown it's expected that the increases will resume next year as the Bank seeks to resume its push to get interest rates back to a more 'neutral' level.
The weather is always a great unknown and there remains some risk that there'll be an El Nino weather system.
If this happens it could cause another major drought which would be most unwelcome especially in areas that rely on rainfall for pasture growth and don't have the insurance of irrigation.
It shouldn't be any surprise that economists are expecting 2014/15 to be a tougher season, especially for dairy, and that economic growth could slow somewhat.
But in saying that most economists also continue to think that the longer term is positive for agriculture and indeed for New Zealand.
We are well placed to continue to build our trade with China and other Asian countries which are becoming increasingly valuable markets for our food as their populations become wealthier and their diets evolve to be higher in protein.
Thankfully farmers, unlike so many of our politicians during the election silly season, still take a long term view to their businesses.