Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Interest Rates, Dollar Hit Rural Confidence

7 June 2002

FARM confidence has eased across most rural sectors, with an increasing number of farmers expecting to earn less in the coming year.

Few farmers now predict an improvement in the rural sector in the next twelve months, while the number who believe their gross income will drop has passed 50 per cent for the first time since the survey began. Even so, over 80 per cent still plan to maintain or increase their level of investment in stock, plant and land.

These are the key results of the latest AC Nielsen/Rabobank Rural Confidence Survey, says Rabobank managing director Bryan Inch.

“The rising dollar has helped lower income expectations, while interest rate expectations are up, so what we are seeing is the result of two key factors impacting on the overall outlook.”

Income expectations in recent surveys have been heavily influenced by the impact of the Fonterra’s payout forecast. In this latest survey, the impact of the increasing dollar and its implications are being felt across the board , Bryan Inch says.

“But this shouldn’t come as a surprise to most farmers. The signals have been there for some time and most farmers have taken this information on board and have planned ahead with this in mind,” says Bryan Inch.

Sheep farmers show the largest change. In the last survey, 37 per cent of sheep farmers expected their incomes to increase and 22 per cent had forecast a decrease. Now less than a quarter of sheep farmers are looking forward to improved incomes and 43 percent expect them to drop. Beef farmers have also lowered their expectations – half expect to earn less, up from 31 per cent.

Two thirds of dairy farmers expect to earn less (49 per cent), and 14 per cent to earn the same (25 per cent).

Interest rate expectations have shown the biggest change from the last survey. Now over 90% of farmers are expecting interest rates to rise in the coming year. This is up from 43 per cent two months ago, and 15% at the same time last year.

“We have seen three rises in the Official Cash Rate over recent months. But we have to remember that rates have been at their lowest level for a number of years and many farmers have taken the opportunity to lock in fixed rates at pretty attractive levels” said Bryan Inch.

Despite rising costs and interest rates, farmers still plan to invest in their properties.

“And this is important” says Bryan Inch. “With incomes decreasing it is essential that productive inputs and maintenance levels are maintained. A lot of money has been reinvested back into farms over the last couple of years, and production gains will be one way to help offset any negative impacts of a rising dollar or falling product prices”.

Next results of the survey will be released in August.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Mycoplasma Bovis: More Properties Positive

One of the latest infected properties is in the Hastings district, the other three are within a farming enterprise in Winton. The suspect property is near Ashburton. More>>


Manawatū Gorge Alternative: More Work Needed To Choose Route

“We are currently working closely and in partnership with local councils and other stakeholders to make the right long-term decision. It’s vital we have strong support on the new route as it will represent a very significant long-term investment and it will need to serve the region and the country for decades to come.” More>>


RBNZ: Super Fund Chief To Be New Reserve Bank Governor

Adrian Orr has been appointed as Reserve Bank Governor effective from 27 March 2018, Finance Minister Grant Robertson says. More>>


ScoopPro: Helping PR Professionals Get More Out Of Scoop has been a fixture of New Zealand’s news and Public Relations infrastructure for over 18 years. However, without the financial assistance of those using Scoop in a professional context in key sectors such as Public Relations and media, Scoop will not be able to continue this service... More>>

Insurance: 2017 Worst Year On Record For Weather-Related Losses

The Insurance Council of New Zealand (ICNZ) announced today that 2017 has been the most expensive year on record for weather-related losses, with a total insured-losses value of more than $242 million. More>>