A Federated Farmers survey has found New Zealand farmer confidence is at its lowest recorded level since the organisation began collecting data in 2009.
Federated Farmers conducts biannual surveys of its membership and says that in January, farmer confidence fell to a new low, with June results seeing the figures fall even further.
“More than 1,200 farmers from around New Zealand responded to the July survey and a net 47.8% of them considered current economic conditions to be bad, down 55.6 points from January when a net 7.8% considered conditions to be good,” said Federated Farmers President and trade/economy spokesperson, Andrew Hoggard.
“That’s a huge drop in six months. Obviously inflation and supply chain disruption fallout from COVID and Russia’s invasion of the Ukraine are part of it, but continued concern over the pace and direction of government reform and regulation, not to mention staff shortages, are also contributing to uncertainty and gloom,” he said.
A net 80.9% of respondents expect general economic conditions to worsen over the next 12 months, up 16.9 points on the January survey.
“That’s not inconsistent with the results from other business confidence surveys,” Mr Hoggard said.
Farmers identified their top concerns as: Climate Change Policy & ETS; Regulation & Compliance Costs; Input Costs; and Debt, Interest, Banks.
Biosecurity concerns also rocketed up the list of concerns following outbreaks of Foot and Mouth Disease in Indonesia and Malaysia.
Despite the slide in confidence, farmers’ profitability expectations haven’t taken as big a hit as might have been indicated, the survey found.
A net 55% of respondents said they were currently making a profit – six points down on the January survey. Looking out over the next 12 months, a net 53.1% of respondents expect their profitability to decline, up 11.9 points on the January 2022 survey when a net 41.2% expected it to decline. This is perhaps to be expected given the squeeze from higher input costs and high commodity prices retreating, says Mr Hoggard.
“What’s also worrying is that for the first time in our survey’s history we’ve recorded a net negative score for production expectations. A net 0.5% of farmers who answered our questions expect their production to decline over the next 12 months, down 2.3 points on the January result,” he said.
“A net 54.6% of respondents expect their spending to increase over the next 12 months, slightly up on January but this will be due to inflation of input prices rather than spending on more goods and services.”
With farmers – like other New Zealanders – having to pay more interest, a net 15.3% of survey respondents said they expected their debt to reduce over the next 12 months, down 15.6 points from the January survey when the figure was 30.9%.
The survey indicated a slight easing in the labour market “but it’s still very tight,” Mr Hoggard said.
A net 44.3% of respondents reported it has been harder to recruit skilled and motivated staff over the past six months, down 4.3 points on the January survey.