A good spell of autumn and early winter weather, and product prices many of which were at record levels, has bred high levels of confidence in the farming sector, as this Federated Farmers survey shows.
However since this survey was taken winter weather has hit with a vengance in both islands, and product prices are falling helped by the soaring currency. And with the financial instability of many of our trading markets, inflation breaking 5%, and interest rate rises looming, things are now not as rosy as they once were.
Farmers traditionally conservative approach to business decisions, has been created by years of volatility in the weather and markets and medium to long term views of growing their business.
Farmers are more confident now than they were in January, according to the latest Federated Farmers Farm Confidence Survey, taken at the beginning of the 2011/12 season.“Most farmers are looking on the bright side, both for the general economy and particularly, for their own farm businesses,” says Bruce Wills, Federated Farmers President and its economics and commerce spokesperson.
“This is despite commodity prices coming off recent peaks and a dollar being at record highs against the greenback. Any gloss taken off returns seems to have been balanced against an outstanding spell of weather at the tail end of last season.“However, since the survey was in the field the dollar has appreciated further. Relatively few believe the Government should tackle the Kiwi dollar head-on. Rather, most identified Government-led spending and borrowing as being the priority.
“The Farm Confidence Survey was also undertaken before some major political policy announcements. While the Labour Party’s policy to fast-track agriculture into the Emissions Trading Scheme (ETS) was known, full details of its proposed Capital Gains Tax wasn’t.
Highlights from the July 2011 Federated Farmers Farm Confidence Survey
A net 16.4 percent of respondents are expecting improvement in the general economy over the coming 12 months, up 11.6 points on January. Confidence has increased for all industry groups and regions, but that of dairy farmers increased by somewhat less than that of meat and fibre farmers and grains farmers
A net 45.8 percent of respondents are expecting improvement in their profitability over the coming 12 months, up 20.3 points on January. Optimism about profitability was up for all industry groups, although again the increase for dairy farmers was less than the other groups.Production is expected to increase with few concerns at this stage about adverse weather conditions. More farmers are expecting to increase spending. A net 33.3 percent of farmers expect to increase spending over the coming 12 months, up 11.7 points on January. Farmers are even more focused on debt reduction with another large increase in the proportion of farmers expecting to reduce debt. A net 45.6 percent of farmers expect to reduce spending over the coming 12 months, up 20.3 points. The farm labour market is highly seasonal, but it also appears that it has tightened.
Reflecting recent comments from the Labour Party on when agricultural biological emissions should be brought into the ETS, climate change policy and the ETS has once again become the biggest issue for farmers. 14.5 percent of respondents cited it as their single biggest issue. As with the January survey, farmers consider that fiscal policy, like reducing government spending and/or government debt, should be the Government’s highest priority.
2 Comments
Is the propaganda machine struggling under load?
A net 33.3 percent of farmers expect to increase spending over the coming 12 months, up 11.7 points on January.
A net 45.6 percent of farmers expect to reduce spending over the coming 12 months, up 20.3 points.
<And can the editor/mangement stop pissing around with what if any tags are allowed?>
And from the meat board, nice bit of spin at the end.
>>>>>>
One other issue of interest to me was the recent report from Rabobank which talked about the flight of speculative money from US agricultural markets. Rabobank said that “Between 21 and 28 June, the managed money category continued the selloff in the US agricultural markets that had begun in early March. In an effort to remove risk from their portfolios, and in light of new fundamental outlooks, investors have covered long positions and sold into the market. Managed money have reduced their net long position by 39% from 8 March to 28 June. The investor liquidation has been a major factor in falling prices. The large fund/manage money position is now the lowest since July 2010, right before the rally began, and could grow quickly if bullish signals reappear.”
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