Farmers are feeling slightly more positive than they were six months ago but very few believe general economic conditions will improve in the year ahead, according to a new survey.
Nearly 1500 farmers responded to the Federated Farmers mid-season Farm Confidence Survey conducted by Research First in January.
Forty-six percent of them expected economic conditions to worsen over the next 12 months.
That's a five percentage point decrease on the July survey finding and the first positive change in forward-looking expectations since that benchmark peaked in July 2017.
However, there was no change in the very small proportion of farmers who expected conditions to improve (4 percent).
Just over 46 percent expected no change in economic conditions (up five percentage points).
"Higher commodity prices are boosting farm incomes and there has been a slight rise in profitability expectations over the next 12 months. However, concern about regulation and compliance costs is unabated since our July survey," said Feds economics and commerce spokesperson Andrew Hoggard.
"That negative sentiment, albeit slightly improved, is consistent with the findings of other recent business confidence surveys," Hoggard said.
Dairy farmers were the least pessimistic about economic conditions ahead but were still in negative territory, while arable farmers are the most pessimistic.
Compared to July last year, the proportion of farmers expecting their profitability to improve is up three points to 24 percent, and those expecting it to worsen is down four points to 21 percent.
"There's a bit of buoyancy over sustained strong commodity prices generally and there's a noticeable nine-point increase in the number of farmers who expect to reduce their debt over the next 12 months - no doubt in part due to the squeeze coming from banks," said Hoggard.
The survey showed regulation and compliance costs remains the single greatest concern for farmers with just over 20 percent of respondents selecting it as their main concern.
Climate change policy and the ETS came in as the second greatest concern (17 percent) and in third place was a new worry - freshwater policy (11 percent).