Farming confidence falls on government policy fears

Concern over government policies has driven a sharp fall in farmer confidence from recent record highs.

Farmers across all sectors were now less positive about the outlook for the agricultural industry, Rabobank's latest rural confidence survey said.

Concern over policies was the main reason cited by farmers who were expecting conditions to worsen.

The survey - completed last month - found the number of farmers expecting the rural economy to improve in the next 12 months had fallen to 29%, down from 46% last quarter.

The reduction in confidence was the largest drop in one quarter since March last year and, combined with the decline in sentiment recorded in the previous quarter, represented a 41% fall in rural confidence since the record high reached in June's survey.

For those farmers who thought the rural economy would worsen over the next 12 months, government policies were cited by 80% as a key reason, Rabobank New Zealand general manager for country banking Hayley Moynihan said.

The survey found the biggest drop in positive sentiment was among horticulturists with the net confidence reading among that group dropping from 51% to 16%. Dairy farmers also registered a significant fall, dropping from 50% to 18%.

The less optimistic outcome on the agricultural economy flowed through to farmers' expectations for their own business performance in the next 12 months, mostly from dairy farmers' and horticulturists' lower income expectations.

Most farmers were still taking an optimistic view on the year ahead, Ms Moynihan said.

The latest Federated Farmers banking survey underlined the level of investment required in modern dairy farming, with the size of mortgages and the number of dairy farms with overdrafts increasing.

Across dairy and non-dairy sectors, three quarters of the 480 farmers who responded to the survey felt under the same pressure from their banks as six months ago, 8% felt under more pressure and 10% were feeling less pressure.

Federated Farmers national vice-president Andrew Hoggard said it was positive bank satisfaction levels among sharemilkers had improved to be close to the industry average as sharemilkers represented the next generation.

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