Global Economic Woes Weigh On Farmer Confidence
NEW ZEALAND - Concerns about a deteriorating global economy and the outlook for agricultural commodity prices have put a dent in New Zealand farmer confidence, according to the latest quarterly Rabobank Rural Confidence Survey.
28 October 2011
2 minute read
The survey – taken earlier this month – found only 35 per cent of the country's farmers expected the agricultural economy to improve in the next 12 months, compared to 48 per cent with that view in the previous survey. Those expecting conditions to worsen increased to 10 per cent, from six per cent previously.
Rabobank general manager New Zealand Ben Russell said the results “equated to a drop in net confidence from 42 per cent to 25 per cent”.
Worries about the deteriorating global economy, along with concerns about the sustainability of high agricultural commodity prices, were the main factors contributing to farmers' negative sentiment.
Of those expecting the agricultural economy to worsen, 44 per cent cited overseas markets/economy and 31 per cent nominated falling commodity as reasons for their pessimism.
“While agricultural conditions have been good across most of the country, farmer sentiment is being influenced by external factors, in particular concerns about the global economy and the public debt issues being faced in Europe and the United States,” Mr Russell said.
“The survey results are also reflecting a recognition that while agricultural returns have been good, commodity prices will not remain at high levels forever.”
Although all sectors had registered a decline in confidence, the Rabobank survey showed overall, on a net basis, sheep and beef farmers remained more optimistic than dairy producers. Of sheep and beef farmers surveyed, 34 per cent expected the agricultural economy to improve, while seven per cent expected conditions to worsen. For dairy producers, 35 per cent had an optimistic outlook, but 13 per cent were pessimistic.
Mr Russell said sheep and beef farmer confidence had likely sustained at higher levels off the back of more recent price rises.
Overall, New Zealand farmers were more optimistic about the outlook for their own businesses than for the agricultural economy in general. A total of 44 per cent of farmers expected performance of their own farm business to improve in the coming 12 months, while 10 per cent expected it to worsen.
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