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Rural Confidence Continues To Improve

Rural Confidence Continues To Improve

Farmer confidence continues to improve as the end of the year approaches. Most farmers now expect the prospects of for the rural sector to improve or stay the same in the coming twelve months, and a lesser number are bracing for a decrease in their income.

These are the key results of the latest bi-monthly AC Nielsen/ Rabobank Rural Confidence Survey, says Rabobank Managing Director, Bryan Inch.

Conducted in October/November, the survey shows a noticeable increase in the number of farmers expecting conditions to remain at their current levels, while the number expecting an improvement in the rural economy has also risen, Mr Inch says.

The improved outlook is runs across all farming sectors but is most pronounced among cropping and dairy farmers. Over sixty per-cent of dairy farmers surveyed are expecting things to improve or stay the same over the next year – more than twice the number of the previous survey in October.

“With world dairy trade prices increasing, and the industry settling down following the formation of Fonterra last year, dairy farmers are starting to appreciate some benefits of the industry consolidation and market outlook” says Mr Inch. . Another driver of confidence is the interest rate outlook. Seventy per cent of farmers now expect interest rates to decrease or stay the same, which is up from 42 per cent in the previous survey and 17 per cent in August.

“Debt servicing is a major cost on many farms and farmers are looking for some stability in this area,” says Mr Inch. “This stability will allow farmers to plan ahead with a degree of confidence when assessing their investment options.” . The key confidence indicator of farmers’ investment intentions remains at a similar level to the previous survey, with eighty per cent of farmers expecting to increase or maintain investment at current levels. “There are a number of external issues that may be impacting on farmer investment intentions at present,” says Bryan Inch. “On the one hand, we have seen the dollar rise, particularly against the US and Australian currencies. And on the other, there are global supply and demand factors positively impacting on New Zealand’s commodity returns.” . “As we head into 2003 most farmers can look forward with a degree of comfort. The outlook for sheep farming is bright, wool prospects are positive and international demand for dairy products is picking up, ” says Mr Inch.

Next results of the survey AC Nielsen/Rabobank Rural Confidence Survey will be released in February 2003.

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