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A long spell of dry weather and the high dollar are causing "a deepening pessimism" to spread among sheep and beef farmers around the country.
Federated Farmers' latest Farm Confidence Survey shows any lift in the overall mood of farmers around the country is largely confined to the dairy sector.
A major split is opening up between dairy and the rest of pastoral agriculture, said Federated Farmers president Bruce Wills.
"It is encouraging that dairy farmers are more positive than six months ago, but the deepening pessimism of meat and fibre and our grain farmers is concerning."
Rising global dairy prices and upward revisions in payout forecasts have helped the dairy sector regain a little confidence in the wider economy and their own profitability, Wills said.
"On the other hand, in the sheep, beef and grain sectors, confidence continues to sink.
"Meat and fibre farmers have seen prices reverse while the high dollar erodes what they ultimately get paid."
While good rain saw farmers' production sky-rocket last season, this year's dry run means sheep and beef production will likely be down.
"Sheep and beef farmers cannot increase production to offset lower prices and the high dollar," Wills said.
"As the survey was in the field in the first half of January, the current dry spell will be of mounting concern."
Adding to farmers' woes, beef prices last week dropped ten cents per kilogram, lamb prices are currently about 35 per cent lower than a year ago, and wool is also struggling.
And although dairy farmers are feeling less pessimistic than six months ago - with farmers expecting to increase production and spending - the mood is far from upbeat.
"What dairy farmers are saying is that they are less pessimistic but this is not the breaking of a new dawn," Wills said.
Another issue which emerged from the survey was a growing sense of frustration about filling skilled vacancies.
"All farmers agree they are struggling to find skilled and motivated staff and this seems odd given unemployment figures," Wills said.
"Skilled and motivated dairy staff are especially hard to find so is there a mismatch between where people live as opposed to where the jobs are?"
Feds' meat and fibre chairwoman Jeanette Maxwell said the fact that some farmers were getting low returns on stock did not mean there was a need to cut overcapacity. The sector needs to keep growing and fill global markets.
The $65 million Collaboration for Sustainable Growth programme announced last week could "supercharge" New Zealand's red meat exports, she argued.
Growing and filling global markets would, in turn, create an industry that young people aspired to, Maxwell said.
The Farm Confidence survey, which is emailed to all Feds members, was carried out in mid-January and attracted 973 responses. It is conducted at the start of the new season in July, then at the mid-season point in January.
- Ben Chapman-Smith of nzherald.co.nz