Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Farmer optimism declines with climbing NZ dollar

Farmer optimism declines with climbing NZ dollar

A four and a half per cent increase in the value of the New Zealand dollar against the US dollar in two months has strongly impacted on farmer confidence in the economy. Confidence levels have fallen from a two-year high in August. Sixty-two per cent of farmers believe the economy will stay the same with only 19 per cent anticipating improvement, compared with 32 per cent anticipating improvement in the last survey.

The latest Rabobank/AC Nielsen Rural Confidence Survey, which was conducted during the first two weeks in October, confirms the strong relationship between exchange rate and rural confidence.

Ben Russell, General Manager Rabobank NZ said the results of this survey emphasise how much a strengthening New Zealand dollar impacts on the rural sector. “Over the last two months dairy farmers have had a warning from Fonterra that the $4.05 payout was calculated on a New Zealand dollar valued at USD 0.61 and may not be sustainable. Meat companies have noted similar concerns on beef and lamb prices. We need to keep remembering that 90 per cent of most agricultural products we produce are for export,” he says.

“This is not just a US dollar phenomenon. The value of the NZ dollar has appreciated more against other currencies. The dollar has strengthened against the yen by almost seven per cent; around six per cent against the euro; and, five per cent against the British pound. New Zealand agricultural products go to markets around the world and there is no currency relief in any.”

The increasing value of the New Zealand dollar is driven, in part, by high interest rates in relationship to those in other developed countries. In the October announcement on the Official Cash Rate (OCR) from the Reserve Bank it stated that the outlook for inflation had improved due to “lower fuel prices, together with the recent rebound in exchange rate, and Statistics New Zealand’s reweighting of the CPI.” As a result the OCR remained unchanged at 7.25 per cent. The Reserve Bank is still predicting a softening in the New Zealand dollar in the medium term. The dollar has been over USD 0.60 since October 2003.

There is one indicator in the survey that suggests farmers may have a more positive view in the medium term. Investment intentions remained firm for sheep and dairy farmers, with only beef showing a small decline.

Mr Russell says more farmers are looking at increasing the capital in their business in the next 12 months which does suggest that the outlook is better than it has been previously. “We are noting some softening in interest in properties for sale. Good quality properties, close to towns, are still selling quickly and at prices equivalent to, if not better than, last year. Others in more remote locations are sometimes attracting little interest and are being withdrawn from sale. Farmers appear to be cautious at the present,” he says.

The Rabobank/AC Nielsen Rural Confidence Survey is the only study of its type in New Zealand and surveys a panel of more than 800 farmers across New Zealand. The survey is conducted bi-monthly, with the next due for release in January 2007.

Rabobank New Zealand is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 100 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank has a AAA credit rating and is ranked the world’s safest private bank by Global Finance magazine. Rabobank operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1500 offices and branches. Rabobank New Zealand is one of the leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 29 branches throughout New Zealand.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Also, Loan Interest: Productivity Commission On Tertiary Education

Key recommendations include better quality control; making it easier for students to transfer between courses; abolishing University Entrance; enabling tertiary institutions to own and control their assets; making it easier for new providers to enter the system; and facilitating more and faster innovation by tertiary education providers... More>>


Higher Payments: Wellington Regional Council Becomes A Living Wage Employer

Councillor Sue Kedgley said she was delighted that the Wellington Regional Council unanimously adopted her motion to become a Living Wage employer, making it the first regional council in New Zealand to do so. More>>


Scoop Images:
Dame Patsy Reddy Sworn In As Governor-General

This morning Dame Patsy Reddy was sworn in as the New Zealand Realm’s 21st Governor-General. The ceremony began with a pōwhiri to welcome Dame Patsy and her husband Sir David Gascoigne to Parliament. More>>


Ruataniwha: DOC, Hawke's Bay Council Developer Take Supreme Court Appeal

The Department of Conservation and Hawke's Bay Regional Investment Company (HBRIC) are appealing to the Supreme Court over a conservation land swap which the Court of Appeal halted. More>>


With NZ's Marama Davidson: Women’s Flotilla Leaves Sicily – Heading For Gaza

Women representing 13 countries spanning five continents began their journey yesterday on Zaytouna-Oliva to the shores of Gaza, which has been under blockade since 2007. On board are a Nobel Peace Laureate, three parliamentarians, a decorated US diplomat, journalists, an Olympic athlete, and a physician. A list of the women with their background can be found here. More>>

Gordon Campbell: On The Key Style Of Crisis Management

At Monday’s post Cabinet press conference Key was in his finest wide- eyed “Problem? What problem?” mode. No, there wasn’t really a problem that top MPI officials had been at odds with each other over the meaning of the fisheries policy and how that policy should be pursued... More>>


Mt Roskill: Greens Will Not Stand In Likely Post-Goff By-Election

“The Green Party’s priority is changing the Government in 2017, and as part of that we’ve decided that we won’t stand a candidate in the probable Mt Roskill by-election... This decision shows the Memorandum of Understanding between Labour and the Green Party is working." More>>


Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news