Record low confidence

Farmers’ confidence has hit a record low according to the latest Rabobank survey, and Mid Canterbury farmers are among those feeling concerned.

The survey, completed late last month, found confidence in the agricultural economy had dropped even deeper into negative territory to -72% – the lowest reading in the survey’s 20-year history.

Mid Canterbury Federated Farmers’ president David Acland said there was no doubt that local farmers’ confidence was “extraordinarily” low.

A recent Federated Farmers survey supported the findings in the Rabobank survey.

Acland said there was “a bit of light” for dairy farmers, with Fonterra announcing an increase in farmgate prices. However, the outlook was “still pretty gloomy”, with farmers having to operate in a “tricky” space, he said.

The survey found more than three-quarters of farmers expected agricultural conditions to worsen over the next 12 months. This was up 12% from the last survey in June.

Only 5% of farmers expected conditions to improve and 15% expected conditions to stay the same.

Rabobank’s New Zealand banking general manager Bruce Weir said lower commodity prices was the main cause of farmer anxiety.

“More than half of farmers (54%) with a negative outlook identifying falling commodity prices as a reason for their pessimistic view on the year ahead.”

He said Fonterra’s recent uplift in farmgate milk price was announced after the survey and not reflected in the survey results.

“Prices for key farm inputs like fertiliser, fuel and feed all remain stubbornly high and, with farm income now significantly lower, farmers’ central focus at the present time is on identifying how they can strip unnecessary costs out of their businesses over the months ahead.”

Other key concerns cited by farmers were government policies (35%), overseas markets (29%) and rising interest rates (18%).

Beef + Lamb New Zealand chief economist Andrew Burtt said it was going to be another tough year for farmers.

“Farmgate prices are expected to be similar to last season but increasing costs, driven by inflation and high interest rates, will continue to squeeze farm profitability.

“We’re forecasting farm profitability to fall by 31% for the 2023-24 year, which follows a decline of 32% in 2022-23 and means profits for farmers have more than halved in two years.”

This is a 15-year low, when you take inflation into account, he said.

By Sharon Davis