For the first time since late 2021, farmer confidence in the broader agri economy is back at net positive levels, the latest Rabobank Rural Confidence Survey has found.
Following a small dip in the June quarter, the latest survey found farmer confidence in the broader agri economy had increased to +3% from -25% previously.
Completed in early September, the survey found the number of farmers expecting the performance of the broader agri economy to improve in the year ahead had doubled since last quarter to 30%, while the number expecting conditions to worsen had fallen to 27% from 40%. The remaining 41% of farmers expected conditions to stay the same.
Rabobank CEO Todd Charteris said the arrival of spring had brought with it a lift in primary producer sentiment, with farmers across all sector groupings now more upbeat about the year ahead.
“Across the previous 10 surveys, pessimism has been the dominant sentiment, so it is really encouraging to see net confidence on the up and back in net positive territory – even if only just, with more farmers positive than negative about the 12 months ahead.”
Higher commodity pricing and falling interest rates were cited by farmers as the two major reasons for expecting conditions to improve.
Since the last survey in June, global dairy prices have continued to trend upwards with this culminating in Fonterra lifting its milk price forecast by 50 cents to a mid-point of $8.50kg/MS in late August, he said.
“We’ve also seen prices for beef continue to soar, while sheepmeat prices have inched upwards as the new season approaches.
“In addition, farmers have been buoyed by the RBNZ’s decision to lower the Official Cash Rate by 25 basis points in August. And with further rate cuts expected over the months ahead, we’ve seen bank interest rates fall significantly across recent months.”
Among farmers holding a pessimistic view of the 12 months ahead, the survey found that for 48%, rising input prices continue to be the major source of concern.
The survey found farmers’ expectations for their own farm business operations were up across the board.
As with the broader agri economy, farmers are now much more upbeat about the prospects for their own businesses, with the net reading on this measure lifting to +18% from -1% previously, Charteris said.
“Each of the major sector groupings – dairy, sheep and beef, and horticulture – recorded net positive readings, and we have to go all the way back to Quarter 3 in 2021 for the last time this happened.”
Dairy farmers and sheep and beef farmers are now much more optimistic about their own businesses than they were in June.
“Dairy farmers are now the most optimistic of all the sector groupings with 42% now expecting the performance of their own business to improve in the next 12 months and less than one in 10 expecting it to worsen,” he said.
There was also a strong lift from sheep and beef farmers on this measure, up to a net reading of +6% from -17%, while growers recorded a more modest 2% lift to +29%.
The percentage of farmers self-assessing their own operations as “unviable” was largely unchanged from last quarter but, Charteris said, there had been an upward movement at the other end of the scale.
“We’d hoped to see the percentage of farmers assessing themselves as ‘unviable’ drop a bit lower. And the fact we’re still seeing this number at a stubbornly high 8% does reflect the really challenging environment primary producers have faced over the last couple of years.
“That aside, it was good to see an uptick in the percentage of farmers viewing their own businesses as ‘viable’ or ‘easily viable’, with this rising to 55% from 48% previously.”
Farm investment intentions also crept up from 14%-19% of farmers expecting investment to increase in the next 12 months, and 17% expected it to reduce.
