Confidence higher than ever

Holly Moynihan
Holly Moynihan
Farmer confidence has hit a record high, underpinned by strengthened farmgate returns.

Rabobank's latest rural confidence survey was at the highest level in its history, which dates back to early 2003.

This year's second quarterly survey showed net farmer confidence had risen to 54%, up from 28% in March.

The most notable jump in confidence was among sheep and beef farmers, with sentiment lifting from 9% last quarter to 53%, Rabobank New Zealand general manager for country banking Hayley Moynihan said.

Sheep and beef farmgate prices continued to hold steady at strong levels for beef and higher than initially expected for lamb. Lower supply from New Zealand as well as other key export regions would underpin good returns over the coming months, Ms Moynihan said in a statement.

Dairy commodity prices continued to strengthen thanks to steady demand and lower supply, and that had been recently reflected in strong opening price signals for the 2017-18 season by many dairy processors.

The survey also found farmers' expectations for their own farm business performance were up on the last survey.

More than half of farmers surveyed anticipated the performance of their own farm business would improve over the next 12 months.

It was very unusual to have farmers from all New Zealand's key agricultural sectors so confident about the outlook for their own business and that boded well for the economy, she said.

Farmers' investment intentions had also lifted, with 40% expecting to increase investment in the next 12 months and only 5% expecting to decrease investment. Horticulturists continued to have the strongest investment intentions.

''With positive margins likely for dairy producers this season, farmers are now able to consider reinvesting in their businesses for items put on the backburner over the last three years, such as technology, shed improvements and new equipment,'' Ms Moynihan said.

Rabobank's latest global dairy quarterly report said strong import growth from China was predicted in the second half of the year.

Weak farmgate milk prices in China resulted in restricted volume growth from large corporate farms coupled with smaller farmers continuing to exit the industry, dairy analyst Emma Higgins said.

Although a 1.2% growth in production was forecast for China, inventory pipelines were running low and mediocre consumption growth would outstrip supply growth.

Prices for dairy fats were at record levels, the US and Europe the key buying markets.

 

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