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New Zealand farmer confidence plunges to record low

Results at a Glance

  • Farmer confidence has fallen dramatically since last quarter and is now at the lowest level recorded in the 20-year history of the survey.
  • Government policy and rising farm input costs were the major concerns cited by farmers, while rising interest costs and falling commodity prices were additional sources of anxiety.
  • Farmers’ confidence in their own farm business performance fell sharply and is now also at a record low.
  • Farmers across all sector groupings were significantly more pessimistic about the prospects for their own business, with sheep and beef farmers recording the lowest level of sentiment.
  • Farmers’ investment intentions were back on last quarter and there are now more than twice as many farmers expecting to reduce investment than those expecting it to increase.

Rabobank New Zealand CEO Todd Charteris

Despite the rural sector having performed strongly through a number of recent challenges, New Zealand farmer confidence – which was already at low levels overall – has plummeted further and now sits at an historical low, the latest Rabobank Rural Confidence Survey has found.

The fourth and final survey of 2022 — completed late last month — found farmer confidence was significantly down on the previous (September) quarter, with the net confidence reading slumping to -71 per cent, from -31 per cent previously. The latest net confidence reading is the lowest in the 20-year history of the survey and far exceeds the previous low of -45 per cent recorded amid the dairy downturn in 2015.

The latest survey found the number of farmers expecting conditions in the agricultural economy to improve in the coming 12 months had fallen to four per cent (from 12 per cent in the previous quarter) while the percentage expecting conditions to worsen rose to 75 per cent (up from 43 per cent). A total of 19 per cent were anticipating the agricultural economy to remain stable (down from 44 per cent previously).

Rabobank New Zealand CEO Todd Charteris said farmers from all the sectors were now significantly more pessimistic about the prospects for the broader agri economy with a cocktail of concerns weighing heavily on farmer sentiment.

“As with recent surveys, rising farm input costs and government policy were the two major reasons cited by farmers with a pessimistic outlook for the year ahead,” he said.

“But we have seen the order reverse this survey, with concern over government policy now the major source of apprehension for farmers, cited by 68 per cent (up from 58 per cent previously) while 51 per cent of farmers were worried about farm input costs (down from 71 per cent last quarter).”

Mr Charteris said the rise in concern over government policy was likely to be tied to the Government’s proposed framework for pricing agricultural emissions released in October.

“This proposal has caused significant angst among primary producers with many believing it unduly penalises farmers and the communities in which they live and work,” he said.

“One of the chief concerns was that the proposal did not fully recognise on-farm mitigants that have been put in place to sequester carbon. The Government’s subsequent announcement at Fieldays that it plans to revisit sequestration policy will have been welcome news for farmers, however, this announcement was made after the survey closed and is therefore not reflected in the results.”

In addition to concerns over government policy and farm input pricing, the survey found rising interest rates (cited by 25 per cent of pessimistic farmers) and falling commodity prices (21 per cent) were further sources of worry for farmers.

“Since the last survey, we’ve seen the official cash rate rise by 125 basis points which has increased interest costs and further squeezed farmer margins. Over this period, we’ve also seen agri commodity prices pull back as global markets react to growing recessionary fears,” he said.

“And all these factors have combined to drain farmer sentiment and leave it deep in the doldrums as we move towards the end of the year.”

Own farm business performance

The survey found farmers confidence in their own farm business performance has also dropped to a new record low, with the overall net reading of -53 per cent well below the previous low of -26 per cent recorded at the beginning of the Covid-19 pandemic (data on this measure was first collected in 2009).

Only seven per cent of farmers were expecting the performance of their own operation to improve in the year ahead, while 60 per cent of farmers were expecting their own farm business performance to deteriorate.

While dairy farmers and growers were markedly more pessimistic about their own operations, Mr Charteris said sheep and beef farmers recorded the biggest fall and the lowest net reading on this measure, dropping to a net reading of -68 per cent from -26 per cent previously.

“Only four per cent of sheep and beef farmers are expecting conditions in their own operations to improve, with 72 per cent expecting conditions to worsen,” he said.

“And again, this big fall in sentiment is likely to largely be attributable to the government’s emissions proposal which – according to the government’s own commentary – could lead to significant reductions in the net revenue and production for New Zealand sheep and beef farms.”

The survey found the net reading for growers’ confidence in their own farm business performance had fallen to -45 per cent, while the net reading among dairy farmers dropped to -47 per cent.

Farm Investment and viability

While it didn’t fall as drastically as the two farmer confidence measures, Mr Charteris said farm investment intentions were also back on last quarter and at a net record low.

“Only 12 per cent of farmers are now expecting to increase investment over the year ahead with 26 per cent planning to reduce investment. The remainder are expecting to keep investment the same,” he said.

“Although at net negative levels overall, horticulturalists now have the strongest investment intentions, while sheep and beef farmers continue to have the weakest.”

Despite the fragile sector confidence, the survey found the vast majority of those surveyed viewed their operations as viable.

“We did see a lift from last quarter in the number of farmers who now believe their operation is unviable, but close to 95 per cent of farmers continue to have faith in the long-term viability of their operations,” Mr Charteris said.

Rabobank’s support for farmers

With farmer confidence plummeting, Mr Charteris said the bank would be staying in close contact with its clients over coming months to support them as they navigate the host of challenges facing the sector.

“As it has been over recent years, a big focus for the bank in 2023 will be on helping our clients to understand the implications of incoming environmental regulation and to develop and implement sustainable solutions that best meet their unique needs,” he said.

“We’ll also be working with our clients to factor in the cost increases impacting their businesses so they can they either consolidate their finances or position themselves to expand their business as opportunities arise.

“While there are many uncertainties in the current environment, we remain positive about the long-term prospects for New Zealand’s food and agribusiness sector, and we’ll continue supporting our clients so they can adapt their farm strategies and systems to ensure they thrive in a fast-changing world.”

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



Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 10 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 offices throughout New Zealand.

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