The latest Rabobank Rural Confidence Survey shows farmer confidence is inching higher, albeit from near-record-low levels. Photo / Pexels
The latest Rabobank Rural Confidence Survey shows farmer confidence is inching higher, albeit from near-record-low levels. Photo / Pexels
While New Zealand farmer confidence edged higher in the last quarter, it's not time to celebrate just yet, according to the latest Rabobank Rural Confidence Survey.
The survey also found that sentiment remains deep in net negative territory overall, with farm input costs an ongoing concern.
The Q3 survey - completed late last month - found farmer confidence was marginally up on the previous (June) quarter, with the net reading climbing to –31 per cent, from –35 per cent previously.
The incremental lift follows a plummet in the net confidence reading seen in the June quarter where sentiment dropped to its lowest level since the start of the Covid-19 pandemic.
The latest survey found the number of farmers expecting conditions in the agricultural economy to improve in the coming 12 months had fallen to 12 per cent (from 13 per cent in the previous quarter) while the percentage expecting conditions to worsen fell to 43 per cent (down from 48 per cent).
A total of 44 per cent were anticipating the agricultural economy to remain stable (up from 38 per cent previously).
Rabobank New Zealand chief executive Todd Charteris said the results were still troubling, despite the small lift in confidence.
"There are more farmers out there pessimistic about the outlook for the next 12 months than positive, so that's kind of concerning," he told The Country's Jamie Mackay.
Government policy was the second most prominent concern for New Zealand farmers, cited by 58 per cent of those with a negative outlook on the coming 12 months.
"That continues to feature quite strongly," Charteris said.
While industry groups and corporates had put in "a lot of work behind the scenes" with policymakers, there was still a "volume of change" coming from the Government, he said.
"It just creates a heightened uncertainty, which is a real challenge."
Concern over government policy was affecting livestock level decisions, with 23 per cent of dairy, sheep and beef farmers planning to decrease numbers, with only six per cent wanting to increase.
"Among those farmers looking to reduce stock, regulatory changes were the dominant driver of intended stock policy alteration, with this cited by half of the farmers in this group," Charteris said in a statement.
The survey also found labour shortages were a concern, with several respondents flagging this as a reason for their negative outlook.
While the Government's plan to allow an additional 3000 migrant workers into New Zealand was a positive step, it felt like a drop in the ocean, Charteris told Mackay.
"The small incremental changes help, but I think we need much more structural change in terms of getting more people into our economy and getting them into the workforce."
Although confidence in the outlook for the broader agricultural economy was marginally up, the survey found farmers' expectations for the performance of their own operations was slightly back on last quarter.
The net score on this measure fell to -24 per cent from -20 per cent previously, driven by a small dip in dairy farmers' expectations.
When it came to business performance on their own farms, the survey found growers and sheep and beef farmers' expectations remained relatively unchanged from last quarter.
Horticulturalists were now the most optimistic of all sector groups on their own business performance, Charteris said in a statement.
"But what's most notable about this quarter's survey is how similar the results are across the sector groupings, with very little difference in the net business performance scores of dairy farmers (-21 per cent) sheep and beef farmers (-26 per cent) and growers (-18 per cent)."
Investment intentions across the agricultural sectors were largely unchanged, with an even split of farmers expecting to increase investment and those expecting investment to decrease.
Dairy farmers continued to have the strongest investment intentions and these strengthened from last quarter, with 23 per cent now saying they are likely to invest more and only 16 per cent intending to invest less.
Overall, the small lift in optimism from last quarter came off the back of continued strong demand for New Zealand's key agricultural products from overseas markets.
This increasing demand, and rising commodity prices, were the major sources of optimism identified by farmers with a positive outlook, Charteris told Mackay.
"So there is some light at the end of the tunnel there."
