After plunging to its lowest level since early 2016, New Zealand farmer confidence has rebounded strongly according to a new survey.
The fourth and final Rabobank Rural Confidence Survey of the year has found that while farmer sentiment remained at net negative levels, there was improved confidence among farmers from all sector groups.
The overall reading rose to -12 percent in the latest quarter, from -33 percent in the previous survey.
The latest survey, completed late last month, found the number of farmers expecting the rural economy to improve in the next 12 months increased to 21 percent (from eight per cent last quarter), while the number expecting the rural economy to worsen fell to 33 per cent (from 41 per cent).
A total of 44 percent were expecting similar conditions (down from 48 percent).
Rabobank New Zealand CEO Todd Charteris, said the improved farmer sentiment had been fuelled by a stronger commodity pricing outlook.
"Farmers across all sector groups were more positive about the prospects for the agricultural economy in the coming 12 months," he said.
"And the key reason for this was rising commodity prices, with this cited by close to two-thirds of farmers holding an optimistic view of the year ahead."
Charteris said recent market developments had been good news for New Zealand's key agricultural exports.
"Since the last survey in September, dairy farmers have been buoyed by continued strong commodity prices.
"In addition, we've seen Fonterra lift their forecast milk price range for the 2019/20 season on two occasions, with an increase of 30 cents to their forecast range in late October, and a further 30 cents increase announced just last week," he said.
"We've also seen the outlook for beef pricing improve, with the recent surge of Chinese demand for New Zealand beef as a result of the pork supply shortfall created by African Swine Fever (ASF) expected to continue into 2020. Similarly, sheepmeat pricing is expected to continue at elevated levels next year with demand forecast to remain strong in our key sheepmeat export markets."
However while confidence had lifted from last quarter, there were still more farmers adopting a pessimistic stance over an optimistic one.
Charteris said uncertainty created by government policy was the key reason.
"Among the one-third of farmers expecting the agricultural economy to deteriorate, 91 per cent cited government policy as the key reason for holding this view," he said.
"We've seen government policy feature as the major concern for farmers across recent surveys, however, this percentage is an increase on recent quarters and the highest proportion of farmers citing government policy as a concern in the survey's history."
Mr Charteris said while a range of government policies were likely to be causing unease among farmers, and the spike was likely attributable to recently proposed freshwater reforms - released in October - and new bank capital requirements.