Farmer Confidence Holds But Workforce Concerns Deepen
The latest Federated Farmers Farm Confidence Survey shows positiveness around economic conditions but deepening concern about the ability to plug workforce gaps.
The survey, carried out by Research First in early July and drawing responses from 1,422 farmers, showed a net 18% of respondents considered the current economic conditions to be ‘good’. That's a 12.4 point improvement from the survey six months earlier and 46 points better than a year ago after the economy was slammed by the pandemic.
Looking forward, a net 39% of farmers expected general economic conditions to worsen over the next 12 months, but that was actually a 5-point improvement on the January survey result.
"The survey was a month ago now and I think farmers were feeling buoyed by strong commodity prices," Feds President Andrew Hoggard said.
"Last Tuesday we had a 1 percent fall in the Global Dairy Trade price index, following 3.6% and 2.9% falls in July auctions. The Reserve Bank has noted inflation is pushing higher and has expressed concern about risky lending, especially in the over-heated housing market.
"I wonder if farmer confidence would be somewhat more dented if we ran the survey this month," Andrew said.
A net 4.4% of respondents expect their profitability to improve over the next 12 months, a 23-point increase on the January 2021 survey when a net 18.3% expected it to decline. A net 32.6% of respondents expect their spending to increase in the year ahead. While stronger spending intentions reflect expectations about profitability, some of it will be related to concern about higher farm input costs.
"It seems many farmers will be using those returns to try and get their debt down in the face of the tightening attitude from banks. A net 29.3% of respondents expect their debt to reduce over the next 12 months," Andrew said.
The most concerning aspect of the survey from Federated Farmers’ point of view is that nearly half of the July survey respondents said it has been harder to recruit skilled and motivated staff. That’s a further 13-point increase on the 35% of farmers who cited workforce shortage worries in January.
"Last week’s red hot labour market data, including the big fall in unemployment, confirms what we already knew.
"It’s calving season in the dairy sector and we know there are too many farmers and staff working huge hours to look after their animals."
Asked to identify their three greatest concerns, farmers listed climate change policy and the ETS (chosen by 18.5% of respondents), followed by regulation and compliance costs (17.1%), and freshwater policy (11.0%).
"The climate change issue has leapt from No 3 to No 1 since January, and probably the anger over the climate/electric vehicle related ute tax is wrapped up in that," Andrew said.