Things are looking a bit more cheerful down on the farm, with more than a third of the country’s farmers now expecting an improvement in the rural economy over the next year.
The latest rural confidence survey from Rabobank – released today – shows that 34% of farmers expect things to get better.
While this is only a slight improvement on the 32% who expected an improvement in the last quarterly survey, the number of farmers expected the situation to worsen fell from 26% to 11%.
The situation has improved since July last year, when 44% expected things to get worse.
Sheep and beef farmers were the main drivers behind the growth in optimism, although drought concerns are still foremost in the mind of many rural businesses.
Rabobank general manager Rural New Zealand Ben Russell said there were several factors working in the favour of sheep and beef producers.
“The dollar fell slightly during the survey period, while there has also been good news in terms of commodity prices in these sectors.”
Lamb and beef prices held at higher levels than expected during the main processing season due to good offshore market prices, according to Mr Russell.
“Farmgate lamb prices season to date have averaged around $80 a head, compared to the approximately $70 a head envisaged at the start of the processing season.”
Dairy farmers – who received good news yesterday with news that Fonterra was boosting its payout by 7% - remained confident, with 94% expecting the agricultural economy to either stay the same or improve, compared with 88% in the previous survey.
Amongst farmers who expected conditions to improve, 37% nominated rising commodity prices as a key reason, while 21% cited improving overseas markets/economies.
But there are still ongoing worries over drought conditions, despite heavy rainfall throughout the country this week, with 14% of respondents highlighting it as a concern.
“This is not surprising considering the conditions we have experienced in Northland and parts of Waikato, Canterbury and Otago,” said Mr Russell.
He added that drought conditions in these regions also explained some of the marked variances seen between different regions this survey.
“The regional differences were noticeably pronounced this time, with 33% of pessimistic upper North Island survey respondents citing drought as a concern, while on the other hand 14% of optimistic farmers in the lower South Island credited good seasonal conditions as reason for the economy improving,” he said.
The survey also found that:
* 35% of farmers expected their own business performance to improve in the next 12 months, although 15% expected it to deteriorate.
* 88% expecting to maintain or increase their farm business investment, up from 87%
* 56 % expect the value of their land to remain static, up from 52%, with 26% believing the value of their land may decrease in the coming 12 months, up from 23%
Sheep and beef farmers were the least optimistic about land prices with 34% expecting a decrease versus 13% expecting an increase.
Wed, 28 Apr 2010