Brexit, protectionism take toll on farmer confidence

The impact of global uncertainty is being blamed for the lowest level of farmer confidence in almost ten years.

Results from Federated Farmers January Mid-Season Farm Confidence Survey shows farmers remain gloomy about the general economic outlook.

Just 5.1 percent of the farmer respondents expected general economic conditions would improve over the next 12 months, while 45.9 percent expected they would worsen. 

The level of pessimism is a fivefold increase on the July 2017 survey.

"The survey found the lowest level of confidence in the economy since July 2009, when we were just emerging from the Global Financial crisis," said Federated Farmers vice-president and economics spokesperson Andrew Hoggard.

"As with the wider business community, I think we're seeing concern about the impact of global uncertainty and instability on our key export markets, with the likes of Brexit and US-China trade relations," he said.

Andrew Hoggard said global uncertainty is worrying the farming community.
Andrew Hoggard said global uncertainty is worrying the farming community. Photo credit: Newshub

Continuing difficulty recruiting staff is another finding that stood out, with a net 40.1 percent of respondents finding it harder over the past six months to recruit skilled and motivated staff as opposed to easier, up 4.2 points on the July 2018 survey.

"While that might reflect seasonal factors, it's also driven by the generally tight labour market and immigration restrictions."

Mr Hoggard said dairy and arable farmers have found staff recruitment particularly hard.

"This indicator has steadily worsened over the 10-year life of the survey and is at a record level of difficulty."

It was the 20th time the Federation had commissioned the twice-yearly survey and the 1462 responses to agricultural market research company Research First was one of the biggest yet.

Just on 56 percent of respondents said they were currently making a profit, down from 62.3 percent in July 2018. Meanwhile 9.3 percent are making a loss, up from 7.8 percent and 32.4 percent are just breaking even, up from 27.8 percent.

Meat and wool farmers continue to be the most positive about their current profitability, and their sentiment improved a little since July. 

"But dairy's worsened - no surprise given the fall in dairy commodity prices and farmgate milk price forecasts in the second half of 2018 - and arables also fell slightly."

Looking out over the year ahead, nearly 30 percent of respondents expected farm profitability would worsen versus 18 percent who expected profit improvement - a 21.8 percent fall on July's 10.4 percent net positive score.

Optimism about future farm production has decreased over the past six months, particularly for dairy and arable farms. Dairy farms have seen the largest net negative change between July and January (-20.2 percent).

Other findings:

- Farmers overall expect their spending will increase slightly over the next 12 months, particularly meat and wool farmers.

- Farmers in most regions expected their debt levels to increase over the next year, with the North Island's East Coast the exception.

- Continuing a finding of the last four surveys, regulation and compliance costs remain the greatest concern for farmers. Concerns about climate change policy and the ETS that became increasingly prevalent over the past three surveys has levelled out, and concern about the political situation has also decreased.

- For this survey drought did not register as a concern - most unusual for a January survey.