Farmers' outlook gloomy - survey

Almost a third of farmers are expecting the agricultural economy to worsen.

A new Rabobank survey shows it's the third consecutive quarter where rural confidence has dropped.

Rabobank spokesperson Hayley Gourley says changes to Government policy have created concerns, including "environmental requirements, requirements related to the eradication of mycoplasma bovis, and carbon policy and climate change".

Farmers also cite falling commodity prices, volatile overseas markets, Fonterra's revised milk price and rising input costs.

Ms Gourley says summer weather is also a factor.

"Particularly what happens around sheep and beef pricing as we get through the peak processing period. That will really determine which way confidence goes from there."

She says dairy prices have been dropping for some time.

"If we saw a turnaround in those prices, we could expect to see improved farmer confidence."

Only 14 percent of those surveyed expected agricultural conditions to improve over the next year.