Farmer confidence dips slightly, but positivity still dominates
Farmer confidence has taken a slight dip according to the final Rabobank rural confidence survey for the year.
Following net readings of +44% in the last two quarters, farmer confidence in the broader agricultural economy crept higher to a net reading of 46%.
The latest net confidence reading has only been bettered once across the last 10 years in the second quarter of 2017.
It has also marked the fourth successive quarter of elevated farmer sentiment.
The latest survey — completed early this month — found 51% of New Zealand farmers were now expecting the performance of the broader agri economy to improve in the year ahead (up from 48% in the previous quarter), while the number expecting conditions to worsen had also risen to 5% (from 4% previously). The remaining 43% of farmers expected conditions to stay the same (44% previously).
Rabobank chief executive Todd Charteris says it is fantastic to see strong farmer confidence extending into a fourth successive quarter.
“The cyclical nature of farming means it’s rare for farmer sentiment to stay elevated for such an extended period. And if we look back across the history of the survey, we have to go all the way back to the 2013/14 season for the last time we had four consecutive quarters where confidence was at such lofty heights,” Charteris says.
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He says that, as was the case in 2013/14, a record milk price has proven to be the catalyst for the latest extended spell of strong farmer sentiment.
“Since our last survey in June, we’ve seen Fonterra maintain its milk price forecast of $10.00/kgMS for the 2025/26 season, and we’ve also seen them raise their forecast for 2024/25 season to $10.15/kgMS,” Charteris adds.
“On top of this, the co-operative recently announced they’ve agreed to sell their consumer and associated businesses to Lactilis and, if approved, this could bring a tax-free capital return of $2.00 per share for their farmer shareholders.
“All this news has been warmly welcomed by sector participants and has helped keep dairy farmer sentiment high.”
Charteris says red meat sector confidence is also rising off the back of an ongoing wave of high commodity prices for beef and sheepmeat.
“Led by the US, global demand for New Zealand beef remains strong and this has flowed through to record-breaking prices for cattle over recent months,” he says.
“Farmgate lamb prices are also at historical highs and a combination of tight domestic supply and strong overseas demand is expected to ensure pricing stays elevated over the remainder of 2025.”
The survey found farmers with an optimistic view on the broader agri economy cited ‘rising commodity prices’ (67%) as the main reason for their optimism. ‘Increasing demand’ (20%) and ‘falling interest rates’ (17%) were the next most-frequently cited reasons for positive sentiment.
Among the 5% of farmers expecting conditions in the agri economy to deteriorate, ‘government policy/ intervention’ (43%) ‘rising input prices’ (30%) and overseas markets/ economies (29%) were the major reasons given for pessimism.
