Farmer Confidence Bounces Back

Farmer Confidence Bounces Back

Farmer confidence has rebounded on the back of the falling dollar, improved climatic conditions and rising international commodity prices.

After reaching the lowest confidence levels seen for almost two years in April, the key indicator of farmer intentions has shown its biggest single lift seen since the survey began in 1999. More farmers are now predicting the rural sector to improve in the next 12 months, with an increasing number anticipating higher returns. And fewer farmers are expecting interest rates to rise in the next year.

These are the key results of the latest bi-monthly ACNielsen/Rabobank Rural Confidence Survey, according to Rabobank general manager Doug Crombie.

Conducted in April/May, the survey shows a noticeable increase in the number of farmers expecting conditions to remain at their current levels or to improve, while the number expecting an improvement in the rural economy has also risen.

“After a period of falling confidence in 2004, farmers are now more optimistic about their industry. The majority of those surveyed did not believe the economy would deteriorate over the next 12 months,” Mr Crombie said.

Mr Crombie said the improved outlook among farmers was not surprising.

“A number of factors had combined over the past six months to put a squeeze on farmer outlook. The high New Zealand dollar was distorting market returns, there were extremes of climate and interest rates were on the rise,” he said.

The key confidence indicator of farmers’ investment intentions has also risen, with 84 percent of farmers expecting to increase or maintain investment in stock, plant and land – back to levels seen prior to the April 2004 drop.

Over half of all farmers now expect their income to rise, up from under 30 per cent in the April survey.

Mr Crombie said the falling dollar had helped raise income expectations, but had more farmers bracing themselves for rising input costs.

He said it was pleasing to see farmers had not overreacted to the circumstances seen earlier in 2004.

“Farmers understand the business cycles they operate in and the need to take a longer term view in agriculture ,” he said.

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 August 2004.

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