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NZ farmer confidence tumbles in January on regulatory, drought fears

Thursday 15th February 2018

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New Zealand farmer confidence tumbled in January as a drought and uncertainty over new government policies take their toll. 

A net 34 percent of those surveyed were pessimistic about general economic conditions over the next 12 months, a marked deterioration from 16 percent who were optimistic in July, according to the latest new season Federated Farmers' Farm Confidence January survey. 

Within the different industry groups, 43 percent of dairy farmers said they now expect general economic conditions to worsen over the next 12 months versus 5.8 percent in July, 34 percent of meat and fibre farmers are expecting the same, versus 12 percent in July, while 47 percent of arable farmers are expecting a deterioration, versus 12 percent in July. 

The farmer confidence echoes the business sentiment surveys showing growing pessimism about the country's economic fortunes under a new administration, triggering Finance Minister Grant Robertson to acknowledge the mood at a select committee hearing last month and say ministers are seeking to allay those concerns. 

"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," Federated Farmers vice president Andrew Hoggard said. 

On farmer profitability, 54 percent said they are generating a profit, 35 percent were breaking even and 9.3 percent were running at a loss. In July, 55 percent were profitable, 34 percent breaking even and 9.6 percent running at a loss. 

However, a new 3.7 percent were pessimistic about farm profitability over the next 12 months versus 39.4 pecent who were optimistic in July. 

Regarding farm debt, 91 percent had debt in January compared to 88 percent in July. Only 37 percent of all farms carrying debt expect that to reduce in the latest survey versus 51 percent in July. The proportion of farms expecting their debt to increase rose to 15 percent from 9.6 percent over the same time period.

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 emissions trading scheme showed a marked increase, Hoggard said. 

Also, compared to previous years, biosecurity concerns such as pests & diseases is more evident and at the highest level ever seen in these surveys. "The cattle disease Mycoplasma bovis is the likely culprit," Federated Farmers said. 

The ability to recruit staff is becoming increasingly difficult - the hardest in the 18 surveys that have been carried out since 2009. "The labour market is tight with low unemployment and high labour force participation, and recent restrictions to immigration policy appear to be exacerbating the problem," according to Federated Farmers. 

The January online survey received 1070 responses from farmers in four industry groups over 24 provinces. 


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