Survey: Farmers are more confident in themselves, but less confident in the overall economy

The survey found that farmers are more confident about their own performance but less confident about the overall agricultural economy.
photo: RNZ Photo/Sally Round

Rabobank’s latest farmer sentiment survey found that farmers are more confident about the performance of their own businesses but are less optimistic about the overall agricultural economy.

The rural lender’s quarterly survey of about 450 farmers found that the proportion who rated their farm business as unviable fell to 7% from 9% in the previous quarter.

Sheep and beef farmers saw the most significant increase in confidence over the last quarter, rising from -31% to -17%.

Todd Charteris, chief executive of Rabobank, said sentiment among sheep and beef farmers had been subdued in recent quarters, so it was encouraging to see the trend gradually picking up.

“This is likely to be largely down to the strong outlook for beef prices over the coming months, but we are also pleased to see a slight uptick in confidence among dairy farmers and horticulturists about their businesses.

“Dairy farmers saw some healthy price increases at the GDT auctions in May and early June which will give them more vigour, while horticulturists continue to see good growing conditions which is helping them to achieve strong returns,” Charteris said.

Todd Charteris, CEO of Rabobank.
photo: supply

However, while farmers’ confidence in their own businesses has increased, they are more pessimistic about the outlook for the overall agricultural economy – with the confidence index falling to -25% from -16% previously.

Rising prices, falling commodity prices and rising interest rates are the three main reasons for the decline in confidence.

Charteris said Rabobank generally believes that farmers’ confidence in their own businesses is slightly higher than the overall agricultural economy index, but the two indicators usually move in the same direction.

“So it was a little unusual to see them take a different path this quarter.

“It’s hard to say exactly why this is happening, but one possible reason is that farmers’ concerns about New Zealand’s broader economic outlook are leading to pessimism about the outlook for the agricultural economy. We did see some comments in the verbatim responses to questions about the agricultural economy that support this view.”

Whatever the reason, it is clear that farmers’ sentiment remains low and has been so for quite some time, Chatteris said.

“Given the importance of the industry to the overall economy, it is imperative that everyone involved in the sector come together to support the country’s food producers and keep things moving in the right direction,” he said.