Feds president Bruce Wills believes that given pastoral agriculture spends about $13 billion on goods and services each year, this has implications for the provincial and national economy.
“It’s no secret while primary export volumes have increased, commodity prices are in retreat. The current export climate still has Europe in a bad way. America remains bad, though slightly less bad of late, but demand from key Asian economies has weakened and this includes China.”
Wills adds the picture in Australia isn’t much rosier; most state economies are either in or tiptoeing their way around recession.
“While some say we shouldn’t have all our blocks of butter in the dairy basket, whatever we export and wherever it goes we face the same tough international environment. It applies equally to hi-tech and tourism as much as to wool.”
Wills says compared to last year he’s getting about $40 less for a heavy prime lamb and expects his farm income to be down 20%.
“The New Zealand dollar isn’t doing exporters any favours either and I’m at a loss to explain why it hasn’t fallen. Economic fundamentals should be driving it lower.
“Whatever the cause, we’re hurting and that will be expressed by farmers keeping a close lid on what they spend.”
He says while there’ll be calls for currency intervention, that’s like trying to stop the incoming tide with your hands.
“We can’t take on global markets, but need actions to support exporters. Councils must keep their rate and fee increases in check and this applies equally to the Government’s spending plans ahead of Budget 2012.”
Wills says the priority for farmers will be productive investment and tackling debt to take advantage of stable interest rates.
“Whatever happens we expect farmers will recast their farm budgets on an extremely conservative basis.”
