Farmer confidence has risen to its highest level in over a decade, rebounding from record lows in recent years.
Federated Farmers’ latest Farm Confidence Survey shows falling interest rates, rising incomes and more favourable farming rules have all played a major role in that improvement.
“I’ve definitely noticed a significant shift in the mood of rural New Zealand. Farmers are feeling a lot more positive,” Federated Farmers president Wayne Langford says.
“The last few years have been bloody tough for a lot of our farming families, with falling incomes, rising interest rates and unpaid bills starting to pile up on the kitchen bench.
“At the same time, we’ve also been struggling with an incredibly challenging regulatory environment and farming rules that haven’t always been practical, affordable or fair.
“These survey results paint a clear picture of a sector finally able to breathe a sigh of relief as some of that weight is lifted.”
The January survey shows farmers’ confidence in current general economic conditions has surged from a deeply negative -66% in July 2024 to a net positive score of 2%.
This marks the largest one-off improvement since the question was introduced in 2016.
Meanwhile, a net 23% of farmers now expect better economic conditions over the next year – the highest confidence level since January 2014.
There has also been a sharp lift in profitability, with 54% of farmers now reporting making a profit – double the number in the last survey six months ago.
Langford says it’s important to note that, despite confidence being at its highest point in more than a decade, it’s still only just in the positive.
“It’s been a remarkable recovery in farmer confidence over a short period of time, but I’m very conscious that we were coming off an extremely low base.
“We’ve come a long way, but there’s a long way to go yet. Federated Farmers will keep pushing hard to cut costs out of farmers’ businesses and reduce some of that regulatory burden.”
The survey results show regulation and compliance costs remains the greatest concern for farmers, followed by interest rates and banks, and input costs.
“When it comes to farmer confidence, a lot of it comes down to what’s coming into our bank account, and what’s going out the other side. It’s a simple equation,” Langford says.
“A lot of that is market driven, and farmers are used to riding those highs and lows, but Government rules and regulations have a significant impact on farmers’ costs.
“Those compliance costs really can make or break your season and have a significant impact on a farmer’s confidence to keep investing in their business.
“The Government have made a great start cutting through red tape for farmers and repealing a lot of the most unworkable rules, but there’s still a lot of work to be done.”
Interest rates and banking issues have consistently been a top concern for farmers, which is why Federated Farmers fought so hard for a banking inquiry, Langford says.
“Interest payments are a huge cost for most farming businesses and farmers have been under massive pressure from their banks in recent years.
“We want to see the Government take a much closer look at our banking system and whether farmers are getting a fair deal from their lenders.”
The survey shows farmers’ highest priorities for the Government are the economy and business environment, fiscal policy, and reducing regulatory burdens.
“If the Government are serious about their ambitious growth agenda and doubling exports over the next decade, this is where they need to be focusing their energy,” Langford says.
“For farmers to have the confidence to invest in our businesses, employ more staff, and grow our economy, we need to have confidence in our direction of travel as a nation too.
“As a country, we’re never going be able to regulate our way to prosperity, but with the right policy settings, we might just be able to farm our way there.”
The report’s key findings include:
– General economic conditions (current): Farmer confidence has surged by 68 points since July 2024, rebounding from a deeply negative -66% to a net positive score of 2%. This marks the largest one-off improvement since the question was introduced in 2016.
– General economic conditions (expectations): Optimism is rising, with net expectations increasing by 29 points since January 2024. A net 23% of farmers now anticipate better conditions over the next year-the highest confidence level seen since January 2014.
– Farm profitability (current): The number of farmers making a profit has doubled since the last survey, with 54% of farmers now reporting a profit-up from just 27%. The net profitability score has surged by 60 points, the strongest turnaround since July 2022.
– Farm profitability (expectations): Confidence in future profitability continues to climb, with a net 31% of farmers expecting improvement over the next 12 months-a 41-point increase since July 2024. This is the highest forward-looking profitability score since July 2017.
– Farm production (expectations): A net 16% of farmers expect production to increase in the next year, extending a positive trend. This marks the first time since 2016/17 that there have been three consecutive periods of predicted growth.
– Farm spending (expectations): Spending intentions have strengthened, with a net 23% of farmers planning to increase spending over the next 12 months-up 26 points from July 2024. This is the strongest expected rise since January 2023.
– Farm debt (expectations): 41% of farmers plan to reduce their debt in the next year, up from 23% in July 2024. Lower interest rates, improved confidence, and stronger production forecasts are driving this shift.
– Ability to recruit (experienced): Hiring challenges persist, with a net 16% of respondents reporting difficulty recruiting skilled staff in the past six months, largely unchanged from July 2024. However, this is the least difficult period for recruitment since July 2012.
– Greatest concerns (current): The top concerns for farmers remain Regulation & Compliance Costs, Debt, Interest & Banks, and Input Costs.
– Highest government priorities: Farmers want the Government to prioritise the Economy & Business Environment, Fiscal Policy, and reducing Regulatory Burdens.