New Zealand rural confidence has taken a sharp dive, with concern over Government policy cited as the key concern for farmers.
The latest quarterly Rabobank Rural Confidence Survey has found farmers across all sectors are increasingly pessimistic about prospects for the agricultural economy in the year ahead.
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Following a gradual rise over the previous three quarters, the overall net rural confidence reading plummeted to -33 percent in the latest survey, down from - two percent last quarter.
The survey, completed in late August and early September, found the number of farmers expecting the rural economy to worsen in the coming 12 months had risen to 41 percent (from 23 percent last survey), while those expecting an improvement had fallen to eight percent (down from 23 percent).
A total of 48 percent were expecting similar conditions (down from 54 percent).
Rabobank New Zealand CEO Todd Charteris said farmer confidence was now at its lowest level since the March 2016 quarter, with concern over government policy identified by farmers as the key factor for their negative view.
"As has been the case for the past four quarters, concern over Government policy remains the chief reason for farmer pessimism, and is cited by 68 percent of farmers holding a negative outlook in the latest survey," he said.
"Government policy relating to freshwater reform and future greenhouse gas obligations presents a major challenge for farmers and, at this time, it's clear farmers view policy direction as the major challenge to the future prosperity of the sector," said Charteris.
Charteris said with Government policy the major source of worry for farmers, it was important to note the latest survey period concluded just before the Government released its freshwater policy statement on September 5.
"Given the reaction to this policy statement from farmers and farmer advocacy groups over recent weeks, it's clear the contents of this document have further eroded the brittle confidence in the sector. However, we won't get a gauge on just how significant an impact this has had until our next survey is released in mid-December."
Other farmer concerns included the performance of Fonterra, negative public perceptions of farming and turbulence in overseas markets.
"Despite farm-gate prices for New Zealand's key commodities remaining relatively strong, there is a wide range of concerns now weighing on farmers' shoulders, and the cumulative effect of these has seen overall confidence slide dramatically."
Dairy farmers recorded the biggest decline in sentiment when it came to the outlook for their own farm businesses in the year ahead, while horticulturalists were the most buoyant of all sectors.
Conducted since 2003, the Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.