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Concerns about the impact of Mycoplasma bovis has seen farmer confidence slide over the past quarter, the latest Rabobank rural confidence survey has shown.
The survey found the number of farmers expecting the rural economy to improve in the next 12 months had fallen slightly from 27% to 26%, while the number expecting it to worsen increased from 12% to 24%.
While the run of strong commodity prices across virtually all sectors continued to support on-farm profitability and farmer optimism, the uncertainty in the operating environment meant many farmers were wary of what the next 12 months would bring, Rabobank New Zealand general manager for country banking Hayley Gourley said.
A key contributor was the impact of the bacterial cattle disease Mycoplasma bovis, Ms Gourley said in a statement.
"Of the 24% of farmers expecting the agricultural economy to deteriorate, 78% of these cited Mycoplasma bovis and the consequences of the eradication process as the key reason for holding this view.
"Government intervention was the second predominant reason for farmer pessimism; however, this was cited far less frequently than in previous quarters," she said.
Overall confidence in the broader agricultural economy had been driven lower by reduced expectations among sheep and beef farmers and horticulturalists.
One factor holding up confidence among dairy farmers was Fonterra’s strong opening forecast of $7 for the 2018-19 season.
"The Fonterra opening forecast was announced just prior to this survey being undertaken and has set a positive tone for the coming year, amidst a period of uncertainty as the industry continues to work through the eradication of Mycoplasma bovis.
"Spirits have been further buoyed by a weak Kiwi dollar relative to the USD, helping to underpin favourable farmgate milk prices," Ms Gourley said.
For drystock farmers, and particularly those reliant on trading or grazing third party livestock for the dairy sector, the greater pessimism recorded this quarter was driven by uncertainty about how the decision to eradicate Mycoplasma bovis would impact on their businesses, she said.