A new survey shows New Zealand farmer confidence has lifted for the second consecutive quarter, but the majority of farmers are still pessimistic.
The latest Rabobank Rural Confidence Survey found the improved sentiment among sheep, beef and horticulture producers was behind the lift.
However while farmer sentiment continued to climb, net farmer confidence was at low levels, in overall negative territory, with more farmers pessimistic than optimistic.
The latest survey - completed in June - found net farmer confidence lifted to minus 2 percent, which was up from minus 9 percent recorded in March 2019.
The survey found an increase in the number of farmers expecting agricultural economy conditions to improve in the coming 12 months (up to 21 percent from 16 percent last quarter) while there were fewer farmers expecting conditions to worsen (23 percent from 25 percent previously).
The number of farmers expecting the performance of the agricultural economy to stay the same fell slightly from 55 percent last survey to 54 percent this quarter.
Rabobank New Zealand CEO Todd Charteris said the more positive view farmers had for New Zealand's agricultural economy was being driven by an improved outlook among sheep and beef farmers and horticulturalists.
"While, as with last quarter, there were still more sheep and beef farmers with a pessimistic view on the New Zealand agricultural economy than an optimistic one, the gap between them has closed considerably," he said.
"Horticultural growers were also more buoyant about the prospects for the agricultural economy and, in a reverse of last quarter, more now expect to see economic conditions improve over the coming year, than those expecting them to worsen."
He said an improved demand outlook was the key contributor to the higher confidence among sheep and beef farmers and horticulturists.
"Among sheep and beef farmers expecting improved conditions over the coming year, the most frequently mentioned reason for this view was stronger demand, cited by 54 percent. Improved demand was also the chief reason horticulturalists were expecting improved conditions, nominated by 44 percent of those with an optimistic outlook.
"This is not surprising given sheep and beef farmers have seen demand for their products lift in recent months largely due to the devastating African Swine Fever outbreak which has crippled Chinese pork production and created new opportunities for New Zealand red meat producers in the Chinese market. Horticulturalists have also seen demand for their products strengthen over the last quarter with import growth occurring in a host of existing and new export markets, particularly for kiwifruit and apples."
Among farmers with a pessimistic view of the agricultural economy, government policy remained the major concern, cited by 72 percent of farmers with a negative outlook on the next 12 months. This was back marginally on the 75 percent who held this concern last quarter.
"Since the last survey, we've seen the Government categorically rule out introducing capital gains tax, with this likely to have come as a relief to most in the agricultural sector."
"However, we've seen also seen the government recently introduce the Zero Carbon Bill proposing ambitious targets for gross methane reductions without the ability to use on-farm planting to directly offset these reductions. And this is a concern for some farmers."
Watch Todd Charteris' interview with Rural Exchange.
Rural Exchange with Hamish McKay and Richard Loe, 6-8am Saturday and Sunday on Magic Talk.