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Drought, disruption undermines farmers’ confidence

A marked drop in farmer optimism and growing concern about the ability to recruit suitable staff are stand-out features of the Federated Farmers Mid-Season Farm Confidence Survey.

For the first time in two years, farmer optimism has decreased, including negative perceptions of the economy, farm profitability, farm production and farm spending. Farm debt levels have also increased and fewer farms are now debt-free.

The Federated Farmers survey is conducted by Research First twice a year (January and July) and 1070 farmers responded to the questionnaire last month.

In terms of optimism about general economic conditions, there was a drop of 23 points compared to July last year and a 50 point drop when asked about the 12 months ahead.

"That’s quite a hit, but it needs to be viewed in context," Andrew Hoggard, Federated Farmers Vice-President said.

"Pretty much all recent surveys of businesses have found a drop in confidence because of the disruption and uncertainty over October’s general election. And in mid-January, when our survey was done, farmers in many regions had endured weeks and weeks of little or no rain."

Last month’s survey found that optimism about future farm production fell for the first time since January 2016, with dairy farmers the most pessimistic. Andrew said it was telling that farmers in all regions expected production to decrease, but particularly those in Taranaki-Manawatu and Otago-Southland, the two areas most affected by drought.

Just over half of all farms are currently making a profit (53.6%), which is slightly lower than six months ago, but the proportion of farms making a loss has stabilised at 9.3%. However, optimism about future profitability has halved over the past six months and pessimistic perceptions have quadrupled.

"Again, some context. Dairy commodity prices were on a downward trajectory for the last half of 2017 and at the time of our survey were only just starting to go the other way," Andrew said.

"It was the dairy sector which suffered the biggest drops in production, farm spending and similar indicators. Meat & Fibre farmers weren’t so bad."

Similar to the July 2017 survey, the greatest concern for farmers was regulation and compliance costs. The dry weather was also on their minds, and worry about climate change policy and the potential for livestock emissions to be included in the ETS showed a marked increase.

The ability to recruit staff is becoming increasingly hard - the hardest in the 18 surveys that have been carried out since 2009.

"Federated Farmers is trying to head this off with initiatives such as our new dairy apprenticeship but this trend is also a message to politicians that as they tinker with immigration settings, the needs of rural New Zealand are very different from what’s going on in Auckland."

Biosecurity (21.3%) leap-frogged the economy and business environment (16.1%) as the issue that farmers wanted the Government to treat as the No. 1 priority - no doubt a reflection of worries over the spread of the cattle disease mycoplasma bovis.

ENDS

Copy of the full survey report, attached.


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