The recent spike in prices for dairy commodities has seen farmer confidence surge to the highest level since early 2018.
(File image). Photo: RNZ / Russell Palmer
Rabobank's latest quarterly rural confidence survey has net farmer confidence sitting in positive territory at +10 percent, up from -23 percent in the previous quarter. That was a significant recovery from March last year when the pandemic pushed confidence down to -44 percent.
The survey found 29 percent of farmers expected conditions in the agricultural economy to improve over the next year, while 19 percent thought it would get worse. About half estimated conditions would stay the same.
Rabobank New Zealand chief executive Todd Charteris said the dairy commodity prices were boosting farmer's outlooks, but there was some good news for the sheep and beef industry as well.
"Commodity prices for red meat products haven't fared as well as dairy prices. But demand from our key markets has held up much better than expected in the first quarter of the year, with Chinese demand in particular leading the charge as our major market continues its post-Covid-19 recovery," he said.
Charteris said horticulture was not faring as well, with more growers expecting the performance of their own business to worsen than those expecting it to improve.
"Labour shortages have been flagged as a major concern by growers in recent quarters and the impact of these shortages has really started to bite over recent months as we've moved through the peak of the harvest season," he said.
"Rising input costs and the lingering impacts of Covid-19 are further factors weighing down confidence in the sector."