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Rising Dollar Dents Farmer Confidence

Rising Dollar Dents Farmer Confidence

Rural confidence continues to improve as the end of the year approaches, although the high value of the New Zealand dollar remains a major concern for farmers, according to the latest ACNielsen/Rabobank Rural Confidence Survey.

Fewer farmers expect the rural economy to worsen in the coming months, with most expecting the current situation to remain well into next year.

Conducted during October and November, the survey indicates a cautious optimism for the year ahead, says Rabobank general manager Doug Crombie.

“There are a number of factors meaning confidence is being pulled in conflicting directions. International product prices are rising and demand is strong for most of our exports. On the other hand, the rising dollar is having a real impact on farm-gate returns,” he said.

Nearly half of the farmers in the survey identified the high value of the New Zealand dollar as being the most pressing factor on their business in the next year.

The survey also indicated a significant change in interest rate expectations during 2004. Of those surveyed 34 per cent expected a rise in interest rates next year, up from 16 per cent two months ago.

“It is notable that only two per cent of farmers saw rising interest rates as the most pressing factor impacting on their business,” Mr Crombie said.

Farmer investment intentions remain almost unchanged from two months ago, with one in five farmers planning to increase their investment in stock, plant and land.

Income expectations also remain positive, with nearly two-thirds of farmers expecting higher or similar incomes as in the previous survey (55 per cent). Mr Crombie said dairy farmers were the most confident about future income, reflecting the September announcement by Fonterra of a rise in their forecast payout.

“With another rise announced by Fonterra this month, we expect to see another increase in dairy farmer expectations in the next survey,” he said.

The ACNielsen/Rabobank Rural Confidence Survey is a bi-monthly monitor of outlook and sentiment in New Zealand rural industries. It 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 early 2004.

To arrange an interview with Doug Crombie, General Manager Rabobank New Zealand, or for more information on the ACNielsen/Rabobank Rural Confidence Survey, please contact:

ENDS

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