Drop in confidence for dairy farmers

Farmers' confidence appears to have gone the way of recent business sentiment, with dairy farmers especially tipping Rabobank's quarterly survey into negative territory for the first time since 2016.
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As with business sentiment, farmers highlighted concerns with the coalition Government’s proposed legislative changes, but also falling commodity prices, combining to underpin their pessimism, Rabobank New Zealand general manager for country banking Hayley Gourley said in her report.
The issues included changes in freshwater management, biodiversity, greenhouse gas emissions, foreign investment requirements for farmland ownership and also to the Dairy Industry Restructuring Act.
While dairy farmers’ confidence waned, that of sheep and beef farmers rose.
«Dairy farmer confidence in the agricultural economy fell sharply with the net confidence reading among them dropping from +14% last quarter to -9% in this [latest] survey,» she said.
The fall was not surprising, given dairy commodity prices had experienced some downward pressure since the previous survey, plus Fonterra’s trimming of the farm-gate milk brace expectations, by 25c for the current season down to $6.75c per kilogram of milk solids.
Other analysts have raised dairy farmer concerns over Fonterra having booked a full year $196million loss in mid-September, plus where the co-op is headed with its troublesome, underperforming investments in China.
Ms Gourley said while dairying was down, confidence in the broader agricultural economy lifted among sheep and beef farmers, compared with the previous quarter.
Sheep and beef farmer optimism moved from negative to positive territory, jumping from -6% last quarter to +7% in the latest survey.
«Sheep farmers are having a good run with intense procurement competition for tight lamb supply seeing unprecedented farmgate prices this season.»
The weaker New Zealand dollar was also underpinning price support for red meat returns and Ms Gourley anticipated elevated prices to continue over the months ahead.
The report, which interviewed 450 farmers during the quarter, noted the escalating US-China trade war was also creating uncertainty for New Zealand’s agricultural producers.
«Farmers will be keeping a close eye on how the latest iteration of tariffs impact the global trade of agricultural products,» she said.
Horticulturists’ confidence was also well back on last quarter, but Ms Gourley noted they had previously recorded high confidence levels in their own business performance for several consecutive quarters, from improving export sales and prices covering a range of their produce.
«The fall in confidence suggests more growers now believe this run of improving returns may be coming to an end,» she said.
However, given 85% of surveyed growers either expected conditions to improve or remain the same in the next 12 months, that showed the sector was still in strong health, she said.
A total of 265 of the surveyed farmers expected to increase their investment spend, while 9% anticipated their investment to decrease.
«The majority of farmers [64%] expected their level of investment in stock, plant and land to remain the same over the next 12 months,» Ms Gourley said.

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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