Farmers’ confidence lowest since 2009

But meat and wool farmers are most positive about their current profitability; pictured, Friesian...
But meat and wool farmers are most positive about their current profitability; pictured, Friesian bulls being fattened on pivot irrigated crop on a Luggate river flat farm, below the Wanaka airport. Photo: Stephen Jaquiery
Farmers’ confidence in the economy has hit a nine-year low with just 5% expecting conditions to improve in the year ahead, largely because of the US-China tariff trade war and Brexit uncertainties.

Difficulty in recruiting skilled staff is now at a record level of concern for the rural sector, while regulation and compliance costs remain a major issue.

The number of farms in profit has taken a hit, more are making losses and more are breaking even.

Federated Farmers vice-president and economics spokesman Andrew Hoggard said the findings from the Fed’s  January mid-season farm confidence survey was the lowest level since mid-2009, when the country was just emerging from the 2007-08 global financial crisis.

"As with the wider business community, I think we’re seeing concern about the impact of global uncertainty and instability on our key export markets, with the likes of Brexit and US-China trade relations," he said in a statement yesterday.

The coalition Government has been plagued by poor business outlook surveys for the past year, which are only just showing signs of turning for the better, as noted by Prime Minister Jacinda Ardern in her "state of the nation" address yesterday.

Just 5.1% of the 1462 farmer respondents expected general economic conditions to improve during the next 12 months and 45.9% expected they would worsen. Mr Hoggard said the level of pessimism was a five-fold increase on the July 2017 survey.

The agriculture sector has now joined the long-suffering construction, manufacturing and hospitality sectors, which have all been facing various levels of skill and recruitment shortages for the past two years, which often dampens businesses’ ability to expand.

Mr Hoggard said the continuing difficulty recruiting staff was another finding which stood out.

A net 40.1% had found it harder during the past six months to recruit skilled and motivated staff, as opposed to easier, which was up 4.2 points on the July 2018 survey.

"While that might reflect seasonal factors, it’s also driven by the generally tight labour market and immigration restrictions," Mr Hoggard said.

"Dairy and arable farmers have found staff recruitment particularly hard.

"This indicator has steadily worsened over the 10-year life of the survey and is at a record level of difficulty," he said.

Mr Hoggard said just on 56% of respondents said they were making a profit, down from 62.3% in July 2018.

"Meat and wool farmers continue to be the most positive about their current profitability, and their sentiment improved a little since July," he said.

Meanwhile 9.3% are making a loss, up from 7.8%, while 32.4% are just breaking even, up from 27.8%, he said.

"Dairy’s worsened — no surprise given the fall in dairy commodity prices and farm-gate milk price forecasts in the second half of 2018 — and arable’s also fell slightly," Mr Hoggard said.

He said a continuing finding of the last four surveys, was that regulation and compliance costs remained the greatest concern for farmers.

"Concerns about climate change policy and the ETS [emissions trading scheme] that became increasingly prevalent over the past three surveys has levelled out, and concern about the political situation has also decreased," Mr Hoggard said.

He noted that drought did not register in the survey as a concern, which was "most unusual" for a January survey.

simon.hartley@odt.co.nz

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