Many New Zealand farmers are looking at next year's books with pessimism, even dairy, despite profits this year reaching their highest level in a decade, a new survey shows.

Industry group Federated Farmers surveyed 634 farms for its 35th biannual farm confidence survey in July.

It found nearly 68% of those surveyed were currently profitable, driven by meat and wool at 78%, then 74% in dairy. However, it showed the struggle for arable farmers was deepening, with nearly one in four making a loss.

Farmers were grappling with ongoing high farm input costs, particularly for fuel, fertiliser and freight, seven months into war in the Persian Gulf that sent prices for its key exports skyrocketing.

Rising costs were the greatest concern among farmers surveyed, and were expected to hurt next year's profits for many, particularly dairy and arable.

The group's president, Colin Hurst, said farmers doing well multiplied for the whole New Zealand economy.

"Obviously it's an all-time high, the profitability for the sectors, but forecasting forward for the next year, there are a few concerns.

"Certainly the rising costs, this is feed, fertiliser, fuel and insurance and those types of things have been rising. The ongoing compliance costs are a bit of an issue."

Nearly 30% of farmers expected conditions to worsen, compared with only 12% expecting improvement.

Hurst said the 8% of farmers who did not know if conditions would worsen suggested genuine uncertainty, rather than pessimism.

"Most of that concern about the year ahead is coming from dairy farmers, with 39% expecting a downturn versus 18% of meat and wool farmers," said Hurst.

Meanwhile, the woes of the country's legacy seed and grain arable sectors were laid bare in the new survey.

Hurst said it was a game of two halves, after a few poor seasons for arable especially in Canterbury.

"Both the dairy and the red meat sector, they're right up there, really tops. Certainly the arable sector is down," he said.

"This is mainly because of increasing costs over the years, but also international markets are down for grains and seeds."

Arable farmers reported negative economic conditions currently, intentions to increase debt and that their wellbeing was affected.

Seventy percent of the 30 farms making a loss felt their wellbeing was affected.

At the time farmers took the survey, the Reserve Bank had just lifted the Official Cash Rate for the first time in three years to 2.50% (lifting further in September), Fonterra cut its 2026/27 forecast farmgate milk price and StatsNZ announced annual inflation at its highest level in two years at 4.1%.

Hurst said the end of June was a time when farmers had a clear view of performance in the financial year just finished.

"So we've had the really good prices," he said.

"But starting the 2026/27 financial year, we're certainly gonna have the full wallop of the extra costs with fertiliser and fuel, so the big part happens in the spring.

"That's why farmers at that particular time were really feeling the impact with the financial confidence going forward."

Hurst described farmers as "politically anxious" ahead of the upcoming general election in November, causing some uncertainty.

"We've essentially had a government that's sort of freeing things up, the red tape and that. But there's still more work to do, farmers just want that [resource management] reforms completed.

"So the concern [is] about what the result with a new government may or may not be."

The survey also found more than half the farms planned to increase their spending on-farm, and while most expected they would pay down debt - around 40% - arable largely intended to borrow more.

Just 15% of farms had no debt.