More than half of sheep and beef farmers expect their farm
business performance to worsen next year. Photo by Peter
Weaker economic conditions, combined with dry seasonal
conditions, have impacted on New Zealand farmer confidence,
particularly in the sheep and beef sector.
The latest quarterly Rabobank rural confidence survey showed
farmer confidence had improved slightly in December, but
remained negative overall for the fourth consecutive survey.
The survey showed 31% of farmers expected the rural economy
to worsen over the coming 12 months, down from 44% last
survey and up from 12% at the same time last year. Only 18%
expected an improvement compared with 33% last year.
Farmers were fairly evenly split on their reasons for
expecting it to worsen - one-third cited the rising New
Zealand dollar and one-third overseas markets and economies,
with just less than one-third noting lower commodity prices.
Other reasons commonly cited included lower dairy and lamb
prices following a period of relatively good prices and
climatic conditions last season.
Those expecting an improvement mentioned the drought in the
United States and globally tight food supplies as having
positive flow-on effects for New Zealand exporters.
Sheep and beef farmers were the most pessimistic, with more
than half expecting their farm business performance to worsen
and only 10% expecting an improvement.
Sheep farmers were responding to the lower farm gate lamb
prices, in 2012-13. That was signalled earlier in the year
and had been reinforced with lamb prices down 25%-30% over
the first two months of the new season, Rabobank New Zealand
chief executive Ben Russell said.
Dairy farmer expectations had nudged back into positive
territory, with farmers expecting the agricultural economy to
worsen dropping from 41% to 21%.
Dry seasonal conditions also depressed confidence this
quarter, with expectations it could get tough over the
summer. Already, cattle and sheep slaughter numbers were
higher as dry conditions had prevailed over the North Island
in particular, Mr Russell said.
The upper North Island was hardest hit, with 70% of farmers
from that region considering conditions too dry, while around
three-quarters of South Island farmers considered soil
moisture to be ''just right''.
Investment intentions had improved, with 27% expecting to
increase farm investment over the coming 12 months, compared
with 20% last survey.
The improvement was largely driven by dairy farmers and
horticulturists, with about one-third in each sector
expecting to lift investment.