Farmer confidence continues upward surge

New Zealand farmer sentiment continues to surge higher, rising strongly for the second consecutive quarter, the first Rabobank Rural Confidence Survey of 2024 has found.

While farmer confidence does remain low overall – with more farmers expecting the performance of the broader agri economy to worsen in the coming year than those expecting it to improve – it is now markedly higher than in September last year when it slumped to its lowest reading in the survey’s 20-year history.

The latest survey — completed earlier this month — found farmer confidence in the agri economy was up to a net reading of -16 per cent from -47 per cent previously. The survey found 38 per cent of farmers were expecting conditions in the broader agricultural economy to worsen over the next 12 months (down from 58 per cent last quarter) with 22 per cent expecting conditions to improve (from 11 per cent previously). The remaining 39 per cent expected conditions to stay the same (29 per cent previously).

Rabobank CEO Todd Charteris said it was pleasing to see farmer confidence continuing to move in the right direction.

“Confidence is still well back on where we’d like to see it, but it is encouraging to see overall sentiment improving.”

Among farmers with an optimistic outlook, Mr Charteris said, government policy was the major factor cited for holding this view (nominated by 28 per cent).

“While a smaller percentage of farmers credited government policy as a reason for optimism than in last quarter, it does seem clear that primary producers are more comfortable with the direction of government policy under the new coalition government than they had been under the previous administration,” he said.

“Other factors that came through in the survey as reasons for optimism included rising commodity prices (20 per cent) and overseas markets / economies (17 per cent).”

Among those expecting conditions to worsen, the survey found rising input costs (63 per cent) continues to be the major source of farmer concern.

“Since our last survey in December last year, we’ve seen prices for key farm inputs remain stubbornly high. We’ve also seen an escalation of tensions in the Red Sea region which has the potential to impact trade logistics and push prices for imported goods even higher,” Mr Charteris said.

“So, it’s therefore not surprising that farm input costs continue to top the list of farmer worries.”

Falling commodity prices (45 per cent) and rising interest rates (42 per cent) were the next most significant concerns among primary producers with a pessimistic outlook.

 

Own farm business performance

 

The survey found farmers’ expectations for their own farm business operations were also higher than last quarter with the net reading lifting to - nine per cent from -31 per cent previously.

Mr Charteris said farmers across all sectors were now more positive about the prospects for their own farm businesses with horticulturalists continuing to be the most optimistic and sheep and beef farmers the least.

“Growers’ net reading on this measure rose to +22 per cent and they continue to remain upbeat about the year ahead off the back of a strong season for most horticultural products and robust overseas demand for their products,” he said.

“Dairy farmers are also now considerably more positive than last quarter (up to a net reading of + five per cent from -20 per cent previously) with this largely attributable to Fonterra lifting its farm gate milk price for the 23/24 season to a mid-point of $7.80 kg/MS in February – a move which came off the back of six consecutive GDT event price lifts across late 2023 and early 2024.

“Expectations for their own businesses were significantly higher among sheep and beef farmers too but, with sheepmeat pricing continuing to underwhelm, the overall net reading remains low at -31 per cent (-62 per cent previously).

 

Viability and investment intentions

 

Mr Charteris said the major black spot in the most recent survey was the rise in the percentage of farmers self-assessing their own operation as unviable, with this number climbing to nine per cent.

“We did see this number lift as high as 12 per cent in quarter three last year before dropping back to six per cent last quarter. And while the general uplift in confidence registered in the survey is positive, the rise back up to nine per cent does illustrate just how difficult the 23/24 season has been,” he said.

The survey found investment intentions were broadly similar to last quarter with 16 per cent of farmers saying they would increase investment over the next 12 months and 29 per cent of farmers expecting investment to decrease.

Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customized banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 27 offices throughout New Zealand.

 

Media contacts:

David Johnston
Marketing & Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com


Denise Shaw
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +612 8115 2744 or +61 2 439 603 525 
Email: denise.shaw@rabobank.com