Dairy Farmers Drive Rural Confidence Boost

Thursday 20 July 2000

DAIRY FARMERS DRIVE RURAL CONFIDENCE BOOST

New Zealand dairy farmers are starting the new season on a fresh wave of optimism, according to the latest results of the AC Nielsen/Rabobank Rural Confidence Survey.
They widely expect to earn more revenue, and plan to invest more on their farms in the next 12 months.
And they’re helping power renewed optimism in the rural sector as a whole, at a time when recent surveys show non-rural business confidence continuing to ease.
Overall farm confidence has climbed since the last survey in May – 55 percent of all farmers now say agricultural performance will improve in the coming year.
That’s up five percent on the last phase of the AC Nielsen/Rabobank Rural Confidence Survey.
Over 40 percent of farmers say they will spend more on their properties and 70 percent expect higher incomes.
However more than 90 percent now expect to pay more for farm inputs, and 88 percent predict continued interest rate rises.
Rabobank National Manager, Rural, Bryan Inch says the overall lift in confidence is good news for the whole country. “Farming is, and will continue to be the major factor in New Zealand’s economic base. If things are positive for farmers, there are going to be flow-on effects for the rest of the country”.
“The results of this survey confirm the current thinking that things are finally looking positive for the rural sector. Product prices remain firm, the climate continues to be favourable to production and interest rates haven’t risen as high as many had expected”.
Of the industry sectors surveyed, dairy farmers currently have the brightest outlook, with 76 per cent looking forward to better industry fortunes, considerably up from 53 per cent in May.
“The announcement of improved payout figures in the industry, and the apparent stabilisation of industry structure, appear to have made a big difference to dairy farm outlook,” Bryan Inch says.
Mixed sheep and beef farmers are next most confident (49 percent), followed by beef producers (45 percent).
The number of all farmers planning to spend more on stock, plant and land this year (42 percent) has now shown virtually no change for six months, a trend Bryan Inch describes as showing that farmers are considering reinvesting some of their recent gains back in their farms.
Dairy farmers are again most likely to spend more (50 percent), followed by beef and sheep farmers, while the total number of farmers who say they will spend less (at 4%) shows virtually no change.
More farmers in all sectors now expect their gross incomes to rise this year (70 percent versus 65 percent), instead of staying the same (24 percent versus 29 percent).
Eighty-five percent of dairy farmers say they will earn more revenue, followed by sheep (68 percent).
Bryan Inch says most farmers (88 percent) remain braced for continued interest rate rises this year, but this figure has now dropped twice in a row, albiet in slight increments, from 94 percent in March.
As far as farm inputs are concerned, however, 11 percent more farmers, or a total of 88 percent, now expect to pay higher prices in the coming 12 months.
“This obviously reflects the continued impact of a relatively weak exchange rate, and points to possible inflationary pressures to come,” Bryan Inch says.
The AC Nielsen/Rabobank Rural Confidence Indicator is the first survey of its type in New Zealand, and is assessed bi-monthly, using AC Nielsen’s 1000-strong panel of farmers throughout the country.
Next results will be released in September.

ENDS

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