Farmers' confidence has risen in recent months but pessimism is growing in the horticulture industry amid an ongoing worker shortage, according to Rabobank's latest quarterly rural confidence survey.
The survey found New Zealand farmer confidence had risen to the highest level since late 2019, however it remained at net negative levels overall.
The increased confidence for dairy, sheep and beef farmers was attributed to improved demand in overseas markets, with farmers expressing more optimism about the prospects for the broader agricultural economy.
Overall, however, the country's farmers were more pessimistic than optimistic about the year ahead, the survey found.
"Government policy and COVID-19 remain the most significant concerns for New Zealand's pastoral farmers with these factors cited as a source of apprehension by more than half of dairy, sheep and beef farmers holding a pessimistic outlook for the year ahead," Rabobank New Zealand chief executive Todd Charteris said on Tuesday.
Charteris said confidence in the pastoral sector was up since the last survey in September, which was in line with a good run of global dairy trade events and Fonterra lifting the midpoint of its farmgate milk price by 40 cents in October.
"Last week's additional 20 cent lift in Fonterra’s payout midpoint will have further buoyed those in the sector, however this came after the survey cut-off and is not reflected in the results," he said.
"Sheep and beef farmer confidence also inched higher in this survey from the historically low levels recorded in September, with this driven by generally solid demand for New Zealand red meat products in key markets like China and the US."
While horticulturists were the most optimistic of all the sectors, ongoing labour shortages caused by foreign workers unable to enter the country to help during the busy harvest season had led to lower levels of confidence than in the September survey, Charteris said.
"The Government’s recent decision to allow 2000 registered seasonal employer (RSE) scheme workers into the country early next year - announced after the close of the survey period - will have been welcomed by growers.
"However, significant labour shortages are still anticipated over coming months and this is clearly weighing on growers confidence."
Rabobank's rural confidence survey has been conducted since 2003, with a panel of approximately 450 farmers interviewed each quarter.
