Rural Confidence On The Up
Stability in farmer returns have had a positive impact on rural confidence levels, according to the latest bi-monthly
ACNielsen/Rabobank Rural Confidence Survey.
In a significant swing from what has been experienced in recent survey periods, the results of the latest survey – which
was taken in July and August – show farmers investment intentions are on the rise, a greater expectation of increased
income and no significant change in interest rates. This optimism comes in spite of 86 per cent of farmers saying the
rise in the New Zealand dollar has had a negative impact on their business. Rabobank managing director Bryan Inch said
the survey indicated that farmers were looking for stability in planning for their business. “While we aren’t seeing the
high returns of recent years, the signs are looking good for income levels to stabilise” he said. “This will help
farmers with their forecasting and planning for the coming season”.
The swing in confidence has been seen across all farming types, with the most significant change occurring among sheep
and beef farmers, where nearly two-thirds expect the rural outlook to improve (almost double the last survey). An
increase in dairy farmer optimism as a result of the recent rise in the forecast payout is expected to be reflected in
the next survey.
“With an increase in payout supported by an improvement in underlying market conditions, we can expect to see dairy
farmers increasingly optimistic”, Mr Inch said. “Going into spring farmers can look forward with a degree of comfort.
The outlook for sheep farming is bright, wool prospects are positive and we have seen the recent announcement of an
increased payout from Fonterra ”. These aspects are reflected in the improved expectation for investment in farmers’
businesses. “Future movements in the dollar however are going to have a significant bearing on farmer outlook in the
medium term. As major exporters of dairy, wool and animal protein, New Zealand farmers rely on the relativity of the
dollar to other currencies to stabilise farm-gate returns” Mr Inch said. Farmers’ expectations are that interest rates
will remain low for the coming year.
The ACNielsen/Rabobank Rural Confidence Survey is the first survey of its type in New Zealand, and uses ACNielsen’s
1000-strong panel of farmers across the country. The next results will be released in November 2003.