Source: Federated Farmers
A recent survey of over 1000 dairy, sheep, beef, and arable farmers has found that confidence is at historic lows, says Federated Farmers President Wayne Langford.
“Farmers are dealing with a lot at the moment with high interest rates, huge inflation, and a steep decline in both meat and milk prices they receive for their products,” Langford said. “We’re also facing an unprecedented level of regulatory change that is heaping on costs, undermining profitability, and creating huge uncertainty for farmers.
“Unfortunately, all these challenges have arrived at the same time, which just compounds the pressure farmers are feeling – it’s just not sustainable.
“We have real concerns about farmer wellbeing and what this might mean for farming families, rural communities, and the wider New Zealand economy.
“When farmers aren’t profitable or feeling confident, they stop spending money and try to cut any costs they can from their business, and the implications of that flow right through the economy,” Landford said.
The Farmer Confidence survey was conducted in July 2023. Concerningly, this was prior to Fonterra’s announcement last week that they were slashing $1 from their 2023/24 forecast milk price.
The four biggest concerns for farmers were debt, interest and banks, regulation and compliance costs, and climate change and ETS policy. “This is the second successive farmer confidence survey to set a new record low with a steep decline over the last six months – so we’re sounding the alarm,” Langford said.
“The deterioration in farmer profit has occurred at frightening speed. This time last year, just 3.5% of farmers reported making a loss. That figure jumped to 27% in this survey, which was conducted prior to Fonterra announcing its payout downgrade.
“This should serve as a wake-up call for all political parties, banks, and processors that something needs to urgently change. There needs to be a real focus on reducing the costs and uncertainty farmers are facing.
“Federated Farmers have recently released a roadmap for restoring farmer confidence with 12 policy priorities for the next Government – I’d suggest politicians may want to re-read it,” Langford concluded.
The survey’s findings:
- 81% of respondents considered current economic to be bad. 1% considered them to be good. This results in a net rating of negative 80% That’s 15 points worse than in the January 2023 survey, when a net negative 65% score.
- This is the lowest level of confidence in economic conditions recorded in Federated Farmers surveys that have been conducted twice a year since 2009.
- 29% of respondents reported making a profit, 27% reported making a loss, resulting in a net 1.8% of respondents currently making a profit. This is a sharp decline from July 2022 when 72% were making a profit and only 3.5% were making a loss.
- Profit was lowest in the Meat & Wool sector. Note this survey was done before the recent forecast downgrade by Fonterra.
- 3% of respondents thought economic conditions would improve in the next 12 months compared to 73% who thought they would worsen. This results in a net-confidence rating of negative 70%. This is a little better than in January but is only because more people thought it would stay the same rather than any pick-up in those thinking it would improve.
- Just 4% of respondents expected their profitability to improve over the next 12 months, while 74% expected it to reduce. This results in a net-negative 70% profitability expectations score.
- Worryingly, 22% of respondents expected to reduce production in the next 12 months while only 14.5% expected it to increase. This results in a net negative 7.5% score for production expectations. It is the third survey in a row where production expectations have been negative.
- 45% expected to reduce spending in the next 12 months compared to 35% who expected to increase spending. This results in a net negative 11% score for spending expectations.
- The greatest concerns for farmers were:
- Debt, Interest & Banks
- Regulation & Compliance Costs
- Climate Change Policy & ETS
- Farmgate & Commodity Prices
- The top priorities for government action were:
- Economy & Business Environment
- Fiscal Policy
- Disaster Recovery
- Climate Change Policy & ETS
