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Rural Confidence On The Up

Rural Confidence On The Up

Stability in farmer returns have had a positive impact on rural confidence levels, according to the latest bi-monthly ACNielsen/Rabobank Rural Confidence Survey.

In a significant swing from what has been experienced in recent survey periods, the results of the latest survey – which was taken in July and August – show farmers investment intentions are on the rise, a greater expectation of increased income and no significant change in interest rates. This optimism comes in spite of 86 per cent of farmers saying the rise in the New Zealand dollar has had a negative impact on their business. Rabobank managing director Bryan Inch said the survey indicated that farmers were looking for stability in planning for their business. “While we aren’t seeing the high returns of recent years, the signs are looking good for income levels to stabilise” he said. “This will help farmers with their forecasting and planning for the coming season”.

The swing in confidence has been seen across all farming types, with the most significant change occurring among sheep and beef farmers, where nearly two-thirds expect the rural outlook to improve (almost double the last survey). An increase in dairy farmer optimism as a result of the recent rise in the forecast payout is expected to be reflected in the next survey.

“With an increase in payout supported by an improvement in underlying market conditions, we can expect to see dairy farmers increasingly optimistic”, Mr Inch said. “Going into spring farmers can look forward with a degree of comfort. The outlook for sheep farming is bright, wool prospects are positive and we have seen the recent announcement of an increased payout from Fonterra ”. These aspects are reflected in the improved expectation for investment in farmers’ businesses. “Future movements in the dollar however are going to have a significant bearing on farmer outlook in the medium term. As major exporters of dairy, wool and animal protein, New Zealand farmers rely on the relativity of the dollar to other currencies to stabilise farm-gate returns” Mr Inch said. Farmers’ expectations are that interest rates will remain low for the coming year.

The ACNielsen/Rabobank Rural Confidence Survey is the first survey of its type in New Zealand, and uses ACNielsen’s 1000-strong panel of farmers across the country. The next results will be released in November 2003.

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