Meat and fibre farmers have become even more pessimistic
about their profitability. Photo by Beef and lamb New
A split industry is highlighted in the latest Federated
Farmers' farm confidence survey, with confidence continuing to
sink in the sheep, beef and grain sectors.
Although overall results seemed to indicate a modest
improvement in the farming economy, the improvement in
confidence since the start of the season masked a ''real
split'' between dairy and the rest of pastoral agriculture,
Federated Farmers' national president, Bruce Wills, said.
While it was encouraging dairy farmers were more positive
than six months ago, the ongoing and deepening pessimism in
the rest of the farming community was concerning, the report
Last July, dairy farmer confidence was, like that of all
farmers, at a low ebb but improved commodity prices in the
second half of 2012 saw upward revisions in payout forecasts.
Those revisions had driven big improvements in dairy farmer
views on their own profitability and on the wider economy,
''albeit off very negative bases''.
More dairy farmers also expected to increase production and
spending and there was only a small drop in those expecting
to reduce debt.
In contrast, meat and fibre farmers had not enjoyed the
benefits of improved world dairy commodity prices and the
strong dollar had further eroded what they got for their
products. Lamb prices were down about 35% on this time last
Meat and fibre farmers had become even more pessimistic about
their profitability and were only slightly less negative than
they were about the wider economy.
They were also less optimistic about production, partly due
to weather concerns in areas such as Hawkes Bay, and more
expected to reduce their spending. There had also been an
increase in meat and fibre farmers expecting to increase
Otago-Southland farmers were the most pessimistic about the
general economy, yet the most optimistic when it came to
expecting to increase production.
Mr Wills said the big issues of concern to farmers were the
increasing cost of farming staples, including the cost of
regulation and compliance, what they were getting paid for
their products, and the high New Zealand dollar.
It underscored the need for the Government to focus its
spending on those things that would increase production while
simplifying and streamlining regulation.
''Tackling the high dollar starts not with a printing press,
but by central and local government cutting back on
borrowing. While some agriculture debt is about survival,
government still has an entrenched `borrow and spend' culture
that needs to change,'' Mr Wills said.
The recently announced Collaboration for Sustainable Growth
programme for the red meat sector must deliver unity, he
Unless the industry adopted the $65 million initiative, it
risked ''oblivion'' in the coming decades, ANZ said
The bank, which is among 10 industry participants involved in
the seven-year programme, said the initiative was critical to
the sector's survival.
''The danger we face is that we are not alone in seeking to
exploit the international market for red meat,'' managing
director commercial and agri, Graham Turley, said.
''If we are serious about wanting to develop vibrant,
globally dominant and highly profitable agricultural
industries, we will need all stakeholders in the industry to
work together to bring about change. If we don't get our act
together, other countries will pass us in a matter of
decades,'' he said.
The ANZ commodity price index rose 0.3% in January, its sixth
consecutive monthly rise, lifting it to a 10-month high.
The series has risen 8% since last July but is still 14%
below its record high in April 2011. Prices for seven
commodities increased in January, with prices falling for
three and unchanged for the remaining seven.
The largest upward contribution came via a 1.5% lift in
forestry prices and 0.4% increase in dairy prices which was
partially offset by lower prices for aluminium and meat.
The stronger New Zealand dollar resulted in a 0.5% drop in
the NZD commodity price index, with NZD prices 10% lower than
a year earlier.
The index has remained in a relatively tight range over the
past five months. The NZD price of beef, dairy and aluminium
had not fluctuated much over that period, but the NZD price
of logs, lamb and seafood exports had slipped to their lowest
in at least three years, ANZ economist Steve Edwards said.