Farmer confidence has plunged to its lowest level in nearly a decade, driven by the slump in global dairy markets.
Rabobank's latest quarterly rural confidence survey showed confidence in the agricultural economy had fallen to a negative net reading of -45%, down from 13% in the March quarter.
With farmer sentiment at its lowest level since early 2006, more than half those surveyed (56%) expected conditions to worsen, up from 23% previously.
At farm level, 58% of dairy farmers expected a poorer farm business performance over the coming 12 months, up from 23%, while just 16% expected it to improve.
Lower commodity prices were the key driver of the lower sentiment, while concerns were also raised around the state of overseas markets and rising input costs.
Investment appetite among dairy farmers had waned, with only 8% holding expansionary intentions over the coming 12 months, Rabobank New Zealand chief executive Ben Russell said.
That reflected the market in which they were operating, despite the longer-term fundamentals remaining positive, he said.
The hangover from a dry summer, coupled with disappointing farmgate returns, flowed into the neutral outlook held by sheep and beef producers.
As in the last quarter, just over half of drystock farmers expected a similar farm business performance to last year.
They were almost equally split as to whether conditions would improve or deteriorate, at 22% and 25% respectively.
ANZ's annual survey of the dairy sector showed farmers were responding to lower prices by controlling costs and recognising the need to invest in increased production, managing director commercial and agri Graham Turley said.
More than half the respondents were planning to invest more in pasture and forage, improved animal genetics and improved feed budgeting.
While they saw decreased profit growth in the short to medium term, they were more upbeat about the longer-term prospects, Mr Turley said.
Lincoln University researchers were conducting a nationwide survey investigating farm debt and the stress it could generate.
Bruce Greig, from the university's faculty of agribusiness and commerce, said there was significant attention on the farming debt situation, particularly in dairying.
The concern was mostly about the consequences of high debt relative to the current profitability of farming, and primary production in general, Mr Greig said.
Little was known about farmer practices in that regard and the research would help better understand the farmer and family issues concerning debt.
