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Farmer Confidence Stabilises

NEW Zealand farm confidence shows signs of stabilising in the New Year, after sliding recently in the wake of global events.

Only one in five Kiwi farmers now expects better times for agriculture in the coming 12 months, but the number of those who predict no change from current prospects remains stable.

Over half still plan to both spend more on their businesses this year, and to earn more.

And most expect interest rates – a prime driver for farm development and expansion – to stay the same, or drop further in 2002.

These are key findings of the latest AC Nielsen/Rabobank Rural Confidence Survey, the nation’s only bi-monthly snapshot of our rural sector.

Taken in November, the survey shows most farmers are facing the new year with a healthy dose of realism, says Rabobank managing director Bryan Inch.

“The caution signs have been out there for some time that record export prices for most of our primary products will ease at some stage.

Farmers are well aware of the cyclical nature of their business and have prepared for any future downturn by investing heavily into their properties over the last couple of years.”

One thing farmers are banking on, after the interest rate cuts this year, is a continuation of historically low interest rates.

“The outlook for interest rates has changed significantly in the two months between surveys,” Bryan Inch says.

“Only 13 per cent of all farmers surveyed now believe rates will climb, well down on 31 per cent last survey, and the lowest number since the survey started two years ago. Eighty-five per cent predict rates to stay the same, or drop further, compared with 67 per cent in October.”

The number of farmers expecting agricultural performance to improve in the next 12 months has dropped slightly from 24 per cent to 21 percent, but those who expect no change remain constant at 64 per cent, Bryan Inch says.

Of the five sectors surveyed – dairy, sheep, beef, mixed and cropping farmers – beef producers are the least optimistic, with only nine per cent looking towards better times ahead (19 per cent last survey) and 23 per cent expecting industry performance to drop (18 per cent).

“Twenty-four per cent of dairy farmers predict better performance this year (32 per cent), and 21 per cent of sheep farmers (15 per cent),” Bryan Inch says.

“At least half the farmers questioned in all sectors believe prospects will remain stable.”

Farm spending plans are again remarkably consistent, he says.

“That’s virtually a story in itself. There has been no change in these results from October – 36 per cent of farmers say they will spend more, 58 per cent will spend the same and only eight per cent will cut spending.”

The only sector to show signs of less spending is dairy farming – 37 per cent will spend more, (41 per cent last survey) and six per cent will spend less.

“This is not unexpected,” Bryan Inch says. “Fonterra have signalled that the payout may not be sustainable at the current levels, and although income expectations are up, this is primarily due to production gains.”

Thirty-two per cent of sheep farmers will spend more (28 per cent), along with 36 per cent of beef farmers (35 per cent).

Income expectations also show signs of recovery after last survey, Bryan Inch says.

“The number of farmers who expect to earn more in the next twelve months is up or steady for most sectors.”

The outlook for farm input prices remains steady, with 84 per cent of all farmers questioned expecting to pay more in the next 12 moths.

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 February.

ENDS

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