Rising concern over the outlook for agricultural commodity prices in the year ahead has pushed New Zealand farmer sentiment to a new record-low reading, according to the latest Rabobank Rural Confidence survey. 

The survey, completed late last month, found farmer confidence in the broader agricultural economy was well back on the already low net confidence reading recorded in June 2023 (-57 per cent). 

It now sits at -72 per cent. 

The latest net reading is the lowest reading in the 20-year history of the survey, eclipsing the previous record low of -71 per cent recorded in quarter four of last year. 

The survey found 77 per cent of farmers were expecting conditions in the broader agricultural economy to worsen over the next 12 months (up from 65 per cent last quarter), with only 5 per cent expecting conditions to improve (from 8 per cent previously). 

The remaining 15 per cent expected conditions to stay the same (24 per cent previously). 

Rabobank New Zealand country banking general manager Bruce Weir said lower commodity prices had now emerged as the chief source of farmer anxiety. 

“Following our last survey in late June, we saw Fonterra lower the mid-point of their farmgate milk price forecast from $8.00kg/MS to $6.75kg/MS, while schedule prices for sheep and beef products have also tumbled,” he said. 

“And it was not surprising to see more than half of farmers (54 per cent) with a negative outlook identifying ‘falling commodity prices’ as a reason for their pessimistic view on the year ahead.” 

Weir said Fonterra’s subsequent revision of the milk price earlier in the week to a new mid-point of $7.25kg/MS was a “significant boost” for the industry. 

“However, this lift was made after the survey period and is therefore not reflected in the latest results.” 

The survey found farmers’ second-most pressing concern was rising input costs (46 per cent). 

Other concerns were Government policies (35 per cent), overseas markets (29 per cent) and rising interest rates (18 per cent). 

Rabobank New Zealand country banking general manager Bruce Weir. Photo / Saul Osborne 

Own farm business performance 

The survey found farmers were also less optimistic about the prospects for their own farm businesses, with more than two-thirds of farmers now expecting this to worsen in the next 12 months. 

The overall net reading on this measure fell to -56 per cent, which was also a new record-low reading, Weir said. 

“[This was] driven by lower confidence among pastoral farmers in their own farm business performance. 

“Across both the dairy and sheep and beef sectors, more than three-quarters of farmers are now expecting the performance of their own operation to deteriorate, and only one in 20 is expecting conditions to improve.” 

Weir said one of the few bright spots in the latest survey was the uplift in growers’ confidence in their operations. 

“Horticulturalists bucked the trend this survey, recording an improved net score of +22 per cent on this measure, up from -8 per cent previously.” 

He said recent improvements in kiwifruit quality management helped drive prices upwards this season, which would have contributed to this higher sentiment among horticulturalists. 

More farmers now identifying as unviable 

Weir said the survey also found investment intentions had contracted, with only 6 per cent of farmers now expecting to increase investment and 40 per cent expecting it to decrease. 

Conducted since 2003, the Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.