Cautious optimism in much of sector

Farmer confidence has remained at relatively high levels throughout 2011, largely on the back of above-average commodity prices, but global economic uncertainty remains top of mind.

The latest Rabobank farmer confidence survey found 33% of New Zealand's farmers expected the agricultural economy to improve in the next 12 months, compared to 35% in the previous survey.

Those expecting conditions to worsen increased slightly from 10% to 12%, while 53% expected conditions to remain stable.

Overall, the results showed farmers remained more confident about expectations for their own farm business performance than that of the broader agricultural economy, due to the uncertainty surrounding the global economic outlook, Rabobank general manager New Zealand Ben Russell said.

"Cautious optimism among the farming sector stems from relatively high commodity prices against a backdrop of global financial market turmoil.

"However, farmers are well aware that they are not immune from the financial instability at play in the northern hemisphere," Mr Russell said.

Of those expecting the agricultural economy to improve, 54% cited rising commodity prices as the reason, particularly sheep and beef farmers (56%) and a greater number of dairy farmers (up from 37% to 50%).

Thirty-one percent of respondents were also optimistic about the state of overseas markets, citing strong global demand, particularly for protein, as a key driver of expected market returns.

Ongoing optimism from sheep and beef farmers reflected the strong farm gate returns received lately with record high lamb prices and strong beef prices, he said.

Dairy farmers remained cautiously optimistic, while confidence in the horticultural sector was comparatively weak. The bacterial disease PSA continued to affect confidence in the kiwifruit industry.

 

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