The impact of widespread drought and a sharp fall in lamb prices over the past year had taken their toll, with sheep and beef farmers lagging considerably behind their dairy counterparts in terms of confidence, investment intentions and self-assessed viability.
While overall rural confidence showed some improvement, with 28% of farmers expecting the agricultural economy to improve in the next 12 months, up from 18% last quarter, that was essentially driven by an uplift in dairy farmer confidence.
Sheep and beef farmers were ''understandably despondent'' that, after a more positive couple of years, on-farm returns had again fallen sharply, Rabobank New Zealand chief executive Ben Russell said.
The survey showed 25% of sheep and beef farmers expected to reduce investment in their farm business over the next 12 months, up from just 7% with that expectation a year ago.
The risk for the meat industry was that, without a sustained improvement in on-farm returns and confidence, farmers would continue to reduce sheep numbers, Mr Russell said.
While debate about the need for change in the sector was positive, it should focus constructively on change and evolution along the entire value chain, including on-farm, not just at the processor level.
''Consolidation in processing facilities alone will have little impact unless accompanied by stronger and more enduring business relationships along the entire value chain and with a firm eye on increasing efficiency and meeting consumer needs in highly-competitive global animal protein markets,'' he said.
While the solutions to the challenges faced by the sector were not simple, there was cause for optimism, given there was a good long-term outlook in demand for animal protein, combined with a ''genuine desire'' for collaboration and improvement among all participants in the sector, he said.
Farmers from as far afield as Pukekohe have indicated they will attend the North Island's first red meat industry meeting in Feilding on Friday.
Organiser and Ohakune farmer John McCarthy said there had been a lot of interest.
The inaugural meeting in Gore last month attracted about 1000 farmers, while last week's meeting in Christchurch drew between 600 and 700.
Typically, North Islanders did not turn out in the numbers of their South Island counterparts, as those in the South had ''that co-operative background'', he said.
A former Meat Board director, Mr McCarthy said he and a group of like-minded farmers in the North Island were working with the Meat Industry Excellence (MIE) group, as both hoped to achieve the same outcome for the industry. The industry was not profitable, compared with other land uses or business models, and another problem was the fragmented approach to the global marketplace.
''If we don't do anything this time round, we're gone,'' he said.
The opportunities did not lie with feeding the world but with feeding the rich, who had the ability to make a choice about what they ate, he said.
Mr McCarthy had spoken to Primary Industries Minister Nathan Guy and told him if a mandate for change was also gained in the North Island, he needed to accept there was a real will for change and his help and backing would be needed.
The first step was to get farmer backing and then industry and Government backing, Mr McCarthy said.
Massey University agribusiness professor Hamish Gow will speak at the Feilding meeting, along with MIE representatives, and a local mayor will discuss the ''detrimental effect'' the current model had on small, rural, provincial towns, he said.
Yesterday, Mr Guy said while recent rain had been welcomed by farmers, problems created by the dry summer would be felt for some time. It was unlikely he would formally lift the official drought status before it expired at the end of the September.
