New Zealand dairy farmer confidence slips due to global price falls

Dairy farmer confidence in New Zealand is on the slide on the back of global dairy price falls over the past number of months.

The slump in dairy farmers’ confidence has been recorded by Federated Farmers’ new-season Farm Confidence Survey which moved into negative territory, with pessimists outnumbering optimists on prospects for the general economy and farm profitability.

“Commodity prices have fallen over the past few months, especially for dairy products, which are down over 30% since our last survey,” says Dr William Rolleston, Federated Farmers President.

“Given the New Zealand Dollar remains stubbornly high, exporters are not getting relief from it acting as a buffer to lower commodity prices. This is putting pressure on dairy farm incomes, albeit off a strong base from 2013/14’s near record season.

Meat and fibre farmers’ confidence has also slipped but remains positive, reflecting better international prices for sheepmeat, beef and wool. Beef and lamb New Zealand figures show that the value of lamb exports is up by 10.5%, mutton 32.1% and beef and veal by 5.8%.

“Production was generally good during the 2013/14 season, bouncing back from last year’s severe drought. Most farmers expect to further increase production this season although some are concerned that El Nino may be an outlier for spring and summer.”

Despite being more pessimistic about farm profitability this is yet to be reflected in farmers’ spending intentions according to the survey. Rolleston highlighted that: “Most will still be making a profit so the pressure to ‘burn the chequebook,’ or whatever we call it in the age of internet banking, is somewhat lessened.

“Some may look to hold or increase spending to boost production in order to offset lower prices, while others might find it difficult to cut spending due to high farm input prices.

“Most farmers remain cautious about debt, with little change in the proportions of farmers expecting to increase, reduce, or hold debt at current levels. We found fewer dairy farmers expect to reduce debt levels but we found more meat and fibre farmers expecting to reduce debt.

Survey highlights:
• 7% expect general economic conditions to worsen
• 4.3% expect their own farm’s profitability to worsen
• 43.9% expect to increase production
• 12.9% expect to increase on-farm spending
• 23.7% expect their farm debt to reduce
• 21% found it harder to find skilled and motivated staff over the past six months

 

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