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Farm Outlook Stable - Rabobank

New Zealand farmers have started 2001 with a more cautious outlook but nearly half still plan to spend more on their businesses in the next 12 months.

And almost three-quarters expect to earn higher incomes.

That’s according to the latest AC Nielsen/Rabobank Rural Confidence Survey, the nation’s only bi-monthly snapshot of our farm sector.

Optimism has eased since the last survey in November, particularly among dairy farmers, but the overall picture is now one of stability, says Bryan Inch, Rabobank managing director.

“What we’re seeing is a continued tendency for farmers to predict no change in the outlook for critical factors like farm economic performance, total investment, gross farm income, input costs and interest rates.

“Very few actually expect these factors to get worse, which suggests many now feel their economy has stabilised at current levels after a year in which farm performance in most categories has been the best for a number of years.”

Taken before the New Zealand Dairy Board’s latest payout announcement, the new survey shows 42 per cent of all farmers expect agricultural performance to improve in the next 12 months, down from 49 per cent in the last survey, and from 60 per cent this time last year.

Exactly half now predict no change, up from 44 per cent in November and 36 per cent a year ago.

Of the five survey categories – dairy, sheep, beef, mixed and cropping - beef farmers remain the most pessimistic with 25 per cent expecting better performance (28 per cent in the last phase) and 14 per cent expecting things to worsen (from 10 per cent in November).

Dairy farm confidence has eased from 66 per cent to 54 per cent but those producers are still the most optimistic, Bryan Inch says, and again, the drop has been in favour of no change rather than worsening performance. “This also reflects the fact that the last financial year saw very strong income and production across most sectors. Many farmers see no change in performance as being a continuation of last years excellent season”

Overall outlook for farm investment remains remarkably consistent.

“There has now been virtually no shift in these figures for the past 12 months. Forty-one per cent of all farmers plan to spend more this season, 52 per cent plan no change and six per cent will spend less. This is almost exactly the same as our first survey,” he says.

Beef producers again show the biggest movement – those who plan more spending have dropped from 48 per cent in November to 39 per cent.

The other noticeable change is among cropping farmers, where the number who plan to cut farm spending has dropped from 10 per cent to zero, in favour of maintaining current levels of investment.

Gross farm income expectations are also very consistent, with 72 per cent of farmers confident of earning more this year, compared with 75 per cent in November and 73 per cent 12 months ago.

Dairy farmers are the most positive here - 86 per cent say they will earn more - but cropping farmers again show new optimism, with 52 per cent expecting better fortunes.

Almost all farmers (92 per cent) are braced for higher input costs but this has eased slightly (97 per cent) in favour of stable costs, probably in response to stronger foreign exchange rates, Bryan Inch says.

The outlook for interest rates over the next 12 months is also stable, after a big swing in November. Just over half (55 per cent) of those questioned say rates will go up, compared with 57 per cent last survey, and 72 per cent in September.

The AC Nielsen/Rabobank Rural Confidence Indicator is the first survey of its type in New Zealand, and uses AC Nielsen’s 1000-strong panel of farmers across the country.

Next results will be released in April.


For further comment, and/or data tables, please contact:

Bryan Inch Michael Hales Karen Newton
Managing Director Marketing Manager Research Director
Rabobank New Zealand Ltd Rabobank New Zealand Ltd AC Nielsen
Wellington Wellington Auckland
025 817 429 04 462 5650 09 488 3188
025 843 551

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