Farmer confidence continues to improve but remains low overall - Rabobank survey

Rabobank's latest survey found farmer confidence in the agri-economy was up to a net reading of -16 per cent from -47 per cent.

The first Rabobank Rural Confidence Survey of 2024 has found New Zealand farmer sentiment continues to surge, rising strongly for the second consecutive quarter.

Farmer confidence remains low overall, with more farmers expecting the performance of the broader agri economy to worsen in the coming year, than those expecting it to improve.

However, confidence is now markedly higher than in September last year when it slumped to its lowest reading in the survey’s 20-year history.

The latest survey — completed this month — found farmer confidence in the agri-economy was up to a net reading of -16 per cent from -47 per cent.

The survey found 38 per cent of farmers were expecting conditions in the broader agricultural economy to worsen over the next 12 months (down from 58 per cent last quarter) with 22 per cent expecting conditions to improve (from 11 per cent previously).

The remaining 39 per cent expected conditions to stay the same (29 per cent previously).

Rabobank chief executive Todd Charteris said it was pleasing to see farmer confidence continuing to move in the right direction.

“Confidence is still well back on where we’d like to see it, but it is encouraging to see overall sentiment improving.”

Charteris said among farmers with an optimistic outlook, government policy was the major factor cited for holding this view (nominated by 28 per cent).

“While a smaller percentage of farmers credited government policy as a reason for optimism than in last quarter, it does seem clear that primary producers are more comfortable with the direction of government policy under the new coalition Government than they had been under the previous administration,” he said.

Charteris said other reasons for optimism included rising commodity prices (20 per cent) and overseas markets and economies (17 per cent).

Among those expecting conditions to worsen, the survey found rising input costs (63 per cent) continued to be the major source of farmer concern.

Charteris said this was unsurprising.

“Since our last survey in December last year, we’ve seen prices for key farm inputs remain stubbornly high.

“We’ve also seen an escalation of tensions in the Red Sea region which has the potential to impact trade logistics and push prices for imported goods even higher.”

Falling commodity prices (45 per cent) and rising interest rates (42 per cent) were the next most significant concerns among primary producers with a pessimistic outlook.

Own farm business performance

Rabobank chief executive Todd Charteris.

The survey found farmers’ expectations for their own farm business operations were also higher than last quarter, with the net reading lifting to - 9 per cent from -31 per cent.

Charteris said farmers across all sectors were now more positive about the prospects for their own farm businesses, with horticulturalists continuing to be the most optimistic and sheep and beef farmers the least.

He said growers’ net reading on this measure rose to +22 per cent.

“They continue to remain upbeat about the year ahead, off the back of a strong season for most horticultural products and robust overseas demand for their products.”

Charteris said dairy farmers were also now “considerably” more positive than last quarter (up to a net reading of + 5 per cent from -20 per cent previously).

Listen to Jamie Mackay interview Todd Charteris on The Country below:

This was largely attributable to Fonterra lifting its farm gate milk price for the 23/24 season to a mid-point of $7.80 kg/MS in February – a move which came off the back of six consecutive GDT event price lifts across late 2023 and early 2024, he said.

Sheep and beef farmers’ own business expectations were high too but, with sheep meat pricing continuing to underwhelm, the overall net reading remained low at -31 per cent (-62 per cent previously), he said.

Viability and investment intentions

Charteris said the major black spot in the most recent survey was a rise in the percentage of farmers self-assessing their own operation as unviable - with this number climbing to 9 per cent.

“We did see this number lift as high as 12 per cent in quarter three last year before dropping back to six per cent last quarter.

“And while the general uplift in confidence registered in the survey is positive, the rise back up to nine per cent does illustrate just how difficult the 23/24 season has been,” he said.

The survey found investment intentions were broadly similar to last quarter with 16 per cent of farmers saying they would increase investment over the next 12 months and 29 per cent of farmers expecting investment to decrease.