The Minister for Agriculture says a drop in confidence in the rural sector is "bloody rubbish".
The 'Rabobank Rural Confidence Survey' shows farmer confidence has eased from the previous quarter, and is now at net negative levels for the first time since early 2016.
The third quarterly survey of the year shows net farmer confidence has fallen to minus three percent, down from the two percent increase recorded in the June 2018 survey.
But Minister Damien O'Connor says confidence in the beef and lamb sector is "pretty good".
"Prices are okay, things are quite positive [for the sector]," he told RadioLIVE's Rural Exchange.
The survey found sheep and beef farmer optimism moved from negative to positive territory, jumping from minus six percent last quarter to plus seven percent in this survey.
Rabobank New Zealand General Manager for Country Banking Hayley Gourley said the slide into net negative confidence was driven by rising dairy farmer pessimism.
"Dairy farmer confidence in the agricultural economy fell sharply with the net confidence reading among dairy farmers dropping from 14 percent last quarter to minus nine per cent in this survey," Ms Gourley said.
Results at a glance:
New Zealand farmer confidence in the broader agricultural economy has eased from last quarter and is now at net negative levels - the first net negative result since 2016
Confidence in the agricultural economy was down among dairy farmers but rose among sheep and beef farmers
Concerns over government policy and falling commodity prices were the main reasons cited for farmer pessimism
Farmers' expectations of their own farm business performance are down on last quarter but remain at positive levels overall
Farmers' investment intentions were back slightly from last quarter with all sectors recording reduced investment intentions.
Conducted since 2003, the Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.
Watch the full interview with Damien O'Connor above.