Results from the Federated Farmers July Farm Confidence Survey have been in the media around the country, and were even the subject of a clash between Labour and National in Parliament’s question time.
It is the 19th time the twice-yearly survey has been conducted and for the first time farmer optimism has increased in all areas except their continuing negative perceptions of the economy.
Optimism about farm profitability, production and spending all improved, and farm debt levels have dropped slightly since the January survey.
But nearly half of the more than 1100 farmers who responded said they expected general economic conditions would worsen over the next 12 months.
As the coalition government’s critics leapt on with glee, that’s the lowest level of confidence since July 2012, and a five-fold increase in pessimism in the past 12 months.
One interpretation is that farmers are feeling uncertain about what the Government will do next on key issues such as water regulations, climate change and industrial relations.
For farmers in the Ashburton district – and the suppliers and rural communities affected by their spending – there’s room for positivity.
Around the nation, 62 per cent of farms reported as currently profitable (up from 53 per cent six months ago), 28 per cent breaking even and 8 per cent making a loss.
Canterbury results mirrored these findings almost exactly.
The net score for profitability (a measure of positive responses vs negative) increased 10 points to +54.
However, more arable farms are just breaking even compared to making a profit, and the number making a loss – 9.7 per cent – is equal highest with dairy.
Looking ahead, expectations of profitability are up slightly, with dairy and arable farmers particularly optimistic but meat and wool farmers noticeably less so, perhaps reflecting a concern that the past season’s excellent farmgate prices might not be sustained this season.
Farmers’ spending expectations going forward were up, but only by a blip (net score up 2.5 points to +16 per cent).
Government MPs I’ve spoken to like to paint a picture of dairy farmers’ fortunes being on the rise, with the higher payouts.
Yes, that’s so – but for many it’s a game of catch-up.
The long arms of the banks are reaching for that money for debt reduction, and understandably so.
Farmers also have to factor in on-farm inflation, with an upwards creep in prices from suppliers who look at the better dairy and meat returns and reason our ability to pay has improved.
That’s just how business works.
With the New Zealand dollar dropping, the cost of imported products is moving up – including fuel.
My impression from talking to farmers all over the country is that while the headline numbers look bigger there’s still not a lot of discretionary cash floating about.
Another finding from the survey that stuck out for me was that nearly 40 per cent of farmers report it got harder to recruit skilled and motivated staff over the past six months.
I’ve said before that we’re in a battle with builders, engineering and construction companies and a whole range of other industries for the same sorts of workers.
We’re all chasing the sort of person who is practical and good with his/her hands. And most of the New Zealanders who fit those criteria are quickly snapped up or already have good jobs.
As our most recent remuneration survey showed, farmers have stepped up their pay to workers across the board.
I commend the Feds dairy apprenticeship scheme to other farmers as a way of securing and upskilling new talent. We have 39 apprentices is training now, and we’re targeting 100 by the end of the year.
Check out www.farmapprentice.co.nz
By Chris Lewis
Chris Lewis is the Federated Farmers Dairy Chairperson