Source: MIL-OSI Submissions
Source: Federated Farmers
Spurred by COVID-19 repercussions, farmer confidence in economic conditions has slumped to the lowest level since 2009, the Federated Farmers July Farm Confidence Survey shows.
Responses from 1,725 farmers saw a net 28.6% of them rate current economic conditions as bad, a 53-point drop on the January survey when a net 24.6% considered them to be good.
“It’s pretty grim looking forward as well,” Feds President and commerce spokesperson Andrew Hoggard says.
A net 58.7% of the farmers who responded expect general economic conditions to worsen over the next 12 months, a 17-point reduction on our survey six months ago when a net 41.5% expected them to worsen.
“Clearly, concern about the global economy is weighing on sentiment.
“The disruption caused by the impact of the pandemic on trade and fears of a lasting global recession, heightened protectionism and trade wars is likely to be a large factor in the negative forward-looking expectations. This fall in expectations is echoing the fall in business and consumer confidence, and the fall in the domestic economy from Covid-19,” Andrew says.
All the farming sector groups recorded worsening perceptions about current economic conditions, but the 70-point slump for meat and wool farmers was particularly severe considering they had been very positive in January.
While meat and dairy prices are reasonable at present, apprehension about what’s ahead in terms of market volatility and prices paid is reflected in the farmers’ answers about their own businesses. A net 46.7% of respondents reported making a profit currently, a 9-point reduction on January 2020’s survey, with 57.3% making a profit, 28.9% breaking even, and 10.6% making a loss. A net 35.5% expect their profitability to worsen over the next 12 months, down 38 points on six months ago, when a net 2.7% expected their profitability to increase.
While the latest survey shows a small rise in the number of farmers who expect their production will increase over the next 12 months, this will probably be recovery from last season’s drought-affected production. The bad news for suppliers and towns where farmers shop is that a net 12.8% of respondents expect their spending to reduce over the next 12 months, a 30 point decrease on the January 2020 survey, when a net 17.3% expected their spending to increase.
The survey report by Research First records farmers’ three greatest concerns as: the economic situation (chosen by 15.6% of respondents), regulation and compliance costs (15.3%), and farmgate and commodity prices (11.1%).
“The government can’t do that much about the first and third of these, with global conditions being the predominant factor. But it can do something about ensuring regulation and compliance costs are sensible and affordable,” Andrew says.
One positive is that farmers are more confident about recruiting staff, perhaps because job options in other industries hit harder by COVID-19 fallout have narrowed. Asked about their ability to recruit experienced farm staff, a net 28.1% of respondents reported it having been harder to recruit skilled and motivated staff, a 13 point reduction on January 2020’s survey when a net 41.3% reported it having been harder.