Rabobank's Rural Confidence Survey reveals some interesting results that are noticeably different to MAF's sheep and beef monitoring report released last week.
This Survey shows sheep and beef farmers are much more confident than last year, and less expect conditions to worsen.
But MAF's beef and sheep model reported that cash surplus will be down on this year, (which proved a difficult year for many), so it's hard to see where the optimism comes from.
The main concerns that arose in this Survey are the old favourites of, currency, increasing costs, and the weather (droughts). The worry is, for two out of these three farmers have no influence over, and reducing their costs in some areas will have a long term production consequence.
Most farmers believe rural land values will remain static, although some in the dairy sector believe prices could firm a bit over this next year.
This Survey was run prior to Fonterra's 2010/11 payout review and the latest fall in dairy commodity prices.
Increasing optimism among NZ's sheep and beef producers has seen the country’s rural confidence levels climb in the first months of 2010, the latest quarterly Rabobank Rural Confidence Survey has shown. Dairy farmer confidence also remained high. However, confidence varies markedly between regions, reflecting the recent drought conditions experienced in parts of the country.
The latest survey – completed this month – shows 34 per cent of the country’s farmers expect the rural economy to improve in the next 12 months. While this was up only slightly on the 32 per cent with that expectation last survey, the number of farmers expecting conditions to worsen fell from 26 per cent previously to just 11 per cent this survey.
Rabobank general manager Rural NZ Ben Russell said the survey showed much of the improvement in rural confidence had been driven by sheep and beef farmers, who had a more optimistic outlook about conditions in, and prospects for, their sectors. “There have been several factors working in the favour of sheep and beef producers,” Mr Russell said. “The dollar fell slightly during the survey period, while there has also been good news in terms of commodity prices in these sectors.”
Mr Russell said lamb prices, in particular, had held at higher levels than expected during the main processing season, due to good offshore market prices. “Farmgate lamb prices season to date have averaged around $80 a head, compared to the approximately $70 a head envisaged at the start of the processing season,” he said.
Meanwhile beef prices had also improved earlier than usual during the peak processing season from the lows experienced pre-Christmas.
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