Farmer confidence in the broader agri economy has risen strongly and is back at net-positive levels for the first time since late 2021, the latest Rabobank Rural Confidence Survey has found.

Following a small dip in the June quarter, the latest survey found it had increased to a net reading of +3% from -25%.

The survey - completed earlier this month - found the number of farmers expecting the performance of the broader agri economy to improve in the year ahead had doubled since last quarter to 30%, while the number expecting conditions to worsen had fallen to 27% (from 40%).

The remaining 41% of farmers expected conditions to stay the same (44% previously).

Rabobank chief executive Todd Charteris said the arrival of spring had brought a lift in primary producer sentiment, with farmers across all sector groupings now more upbeat about the year ahead.

“Across the previous 10 surveys, pessimism has been the dominant sentiment, so it is really encouraging to see net confidence on the up and back in net positive territory - even if only just, with more farmers positive than negative about the 12 months ahead,” he said.

Charteris said farmers anticipating a better year ahead cited higher commodity pricing (40%) and falling interest rates (31%) as the two major reasons for expecting conditions to improve.

He said that since the last survey in June, global dairy prices continued to trend upwards, culminating in Fonterra lifting its milk price forecast by 50 cents to a mid-point of $8.50kg/MS in late August.

Beef prices continued to soar, while sheepmeat prices had inched upwards as the new season approached, he said.

“In addition, farmers have been buoyed by the RBNZ’s decision to lower the official cash rate by 25 basis points in August, and with further rate cuts expected over the months ahead, we’ve seen bank interest rates fall significantly across recent months.”

Among farmers with a pessimistic view of the 12 months ahead, the survey found that rising input prices (48%) continued to be the major source of concern.

Own farm business performance

Rabobank chief executive Todd Charteris says the arrival of spring has brought a lift in primary producer sentiment.

The survey found farmers’ expectations for their own farm business operations were up across the board.

Charteris said that, as with the broader agri economy, farmers were now much more upbeat about the prospects for their own businesses, with the net reading on this measure lifting to +18% (from -1%).

Dairy, sheep and beef, and horticulture recorded net-positive readings, “and we have to go all the way back to quarter three in 2021 for the last time this happened”, he said.

The survey found dairy farmers and sheep and beef farmers were now much more optimistic about their own businesses than in June.

Charteris said dairy farmers were now the most optimistic of all the sector groupings, with 42% expecting the performance of their own business to improve in the next 12 months and less than one in 10 expecting it to worsen.

He said there was also a strong lift from sheep and beef farmers on this measure, up to a net reading of +6% (from -17%).

Growers recorded a more modest lift: +29% from +26% last quarter.

Viability and investment intentions

While the percentage of farmers self-assessing their own operations as “unviable” was largely unchanged from last quarter (8% from 7% previously), Charteris said there had been an upward movement at the other end of the scale.

“We’d hoped to see the percentage of farmers assessing themselves as ‘unviable’ drop a bit lower.

“And the fact we’re still seeing this number at a stubbornly high 8% does reflect the really challenging environment primary producers have faced over the last couple of years,” he said.

That aside, Charteris said it was good to see an uptick in the percentage of farmers viewing their own businesses as “viable” or “easily viable”, with this rising to 55% from 48%.

He said farm investment intentions also crept up, with 19% of farmers expecting investment to increase in the next 12 months (14% last quarter), and only 17% expected it to reduce (23% previously).

“It’s been over two years since we’ve seen investment intentions in net-positive territory.”

The Rabobank Rural Confidence Survey has been conducted since 2003. It is administered by the independent research agency Kantar and interviews a panel of approximately 450 farmers each quarter.