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Farmers Pick Continued New Season Good Fortune

Farmers Pick Continued Good Fortunes For New Season

OVER half our dairy, sheep and beef farmers expect current economic good times in agriculture to continue for another year.

That’s despite severe autumn drought, and economic slowdown both abroad and at home.

More than 90 per cent of all farmers will spend the same or more on their businesses in the next 12 months, and over 80 per cent expect to earn as much as they are now, or more.

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

Taken before the NZ Dairy Board’s record 2000/2001 season payout announcement, the new survey shows national farm confidence has stabilised, after a significant drop in March.

Overall farm spending outlook remains constant, as do general expectations of gross farm income, but the number of sheep farmers who expect to earn less this season has risen sharply.

Bryan Inch, Rabobank managing director, says 34 per cent of all farmers now predict agriculture’s economic performance will be better this coming season, versus 32 per cent last survey, while 58 per cent expect no change (60 per cent).

Dairy farmers are slightly less confident than two months ago, possibly reflecting the uncertainty of the mega merger vote and future management.

But beef, mixed and crop farmers are actually more optimistic about their industries now than they have been since late last year, Inch says.

“Once again we’ve seen no change in the number of all farmers (seven per cent) who expect agricultural performance to worsen in the next 12 months – overall, stability remains the order of the day.”

Outlook for farm investment over all sectors continues to show ‘remarkable’ consistency, Inch says.

“A total of 92 per cent of all farmers predict similar or increased spending in the next 12 months. This is very heartening for agriculture in particular and the New Zealand economy in general, especially considering such factors as continued economic slow down in our main export markets,and a recent drop in business confidence at home.

“The main exception is sheep farmers, and here as with the income outlook we attribute the more cautious expectations to prolonged drought conditions particularly in the South Island.

“Twenty-nine per cent of sheep farmers now say they’ll spend more, down from 35 per cent, while 13 per cent plan to cut investment, up from eight percent.”

Dairy farm spending predictions are virtually unchanged from the March survey at 45 per cent; and mixed farmers show the most positive move towards higher investment (43 per cent compared with 34 per cent), Inch says.

While expectations of farm income remain high, the current record levels mean potential to exceed them is limited.

“The number of dairy farmers who say they’ll earn more has dropped 10 per cent, to 63 per cent, but most of that swing has been in favour of maintaining their incomes.”

Sectors whose income expectations have taken the biggest knock are again sheep, where 21 per cent of producers now say their earnings will be back (12 per cent), and crop (20 per cent versus seven per cent).

“Interestingly, however, beef farmers are less pessimistic in this regard than they were two months ago, with 13 per cent now picking reduced earnings compared with 21 per cent. And the number of mixed farmers who expect higher incomes has jumped from 49 per cent to 60 per cent.“

The general outlook for farm input prices shows little change – 87 per cent of respondents expect inputs to cost more this year (89 per cent) while 12 per cent expect prices to stay constant (10 per cent)

And Inch says farm outlook for interest rates continues to be positive - only 15 per cent of all farmers now expect rates to rise (19 per cent), while 58 per cent predict no change (61 per cent) and 21 per cent say they will drop (18 per cent).

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 August.

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