Farmer pessimism in face of M.bovis

Rabobank New Zealand general manager for Country Banking, Hayley Gourley

CONCERNS about the impact of Mycoplasma bovis disease on the country’s agricultural sector have seen New Zealand farmer confidence decline over the past quarter, according to the latest Rabobank Rural Confidence Survey.

While farmer confidence remains at net positive levels, the overall reading dropped to +two per cent in the latest quarter, from +15 per cent in the previous survey.

The latest survey – completed last month – found the number of farmers expecting the rural economy to improve in the next 12 months had fallen slightly to 26 percent (from 27 percent last quarter), while the number expecting the rural economy to worsen rose to 24 percent (from 12 percent). A total of 46 percent were expecting similar conditions (down from 59 percent).

Rabobank New Zealand general manager for Country Banking, Hayley Gourley, said New Zealand rural confidence was now in the balance with the number of farmers expecting conditions to improve closely matched by those expecting conditions to worsen.

“The run of strong commodity prices across virtually all sectors continues to support on-farm profitability and farmer optimism, but, despite the positive broad-based returns, the uncertainty in the operating environment means many farmers are wary of what the next 12 months will bring,” she said.

Ms Gourley said a key contributor to farmer uncertainty, and the chief reason for the 13 percent slide in the farmer confidence net reading, was the impact of Mycoplasma bovis disease.

The survey indicates New Zealand farmer confidence has declined since last quarter with the number of farmers expecting conditions to improve now only slightly outweighing those expecting conditions to worsen.

“Concern over Mycoplasma bovis was the main reason cited for farmer pessimism,” she said.

“Farmers’ expectations of their own farm business performance are down on last quarter but remain at elevated levels, particularly for horticulturalists.

“Investment intentions remain strong and increased slightly and farmers’ perceptions of their own farm business viability are marginally up and now at a record high.”

Ms Gourley said of the 24 percent of farmers expecting the agricultural economy to deteriorate, 78 percent of these cited Mycoplasma bovis and the consequences of the eradication process as the key reason for holding that view.

“Government intervention was the second predominant reason for farmer pessimism, however, this was cited far less frequently than in previous quarters.”

The survey found overall confidence in the broader agricultural economy had been driven lower by reduced expectations among sheep and beef farmers and horticulturalists.

“Net confidence dropped sharply among sheep and beef farmers to minus six percent (from +11 percent previously) while among horticulturalists it fell to minus ninepercent (from +34 percent previously). Dairy farmer confidence remained robust, rising slightly to plus-14 percent (from +11 percent previously).

For drystock farmers, and particularly those reliant on trading or grazing third party livestock for the dairy sector, Ms Gourley said the greater pessimism recorded this quarter was driven by uncertainty about how the decision to eradicate Mycoplasma bovis would impact on their businesses.

“Many operations will need to revisit their existing business models in the longer term, but in the short term there is still a significant level of uncertainty as testing for the disease continues and the ramifications of the disruption across the supply chain continues.”

CONCERNS about the impact of Mycoplasma bovis disease on the country’s agricultural sector have seen New Zealand farmer confidence decline over the past quarter, according to the latest Rabobank Rural Confidence Survey.

While farmer confidence remains at net positive levels, the overall reading dropped to +two per cent in the latest quarter, from +15 per cent in the previous survey.

The latest survey – completed last month – found the number of farmers expecting the rural economy to improve in the next 12 months had fallen slightly to 26 percent (from 27 percent last quarter), while the number expecting the rural economy to worsen rose to 24 percent (from 12 percent). A total of 46 percent were expecting similar conditions (down from 59 percent).

Rabobank New Zealand general manager for Country Banking, Hayley Gourley, said New Zealand rural confidence was now in the balance with the number of farmers expecting conditions to improve closely matched by those expecting conditions to worsen.

“The run of strong commodity prices across virtually all sectors continues to support on-farm profitability and farmer optimism, but, despite the positive broad-based returns, the uncertainty in the operating environment means many farmers are wary of what the next 12 months will bring,” she said.

Ms Gourley said a key contributor to farmer uncertainty, and the chief reason for the 13 percent slide in the farmer confidence net reading, was the impact of Mycoplasma bovis disease.

The survey indicates New Zealand farmer confidence has declined since last quarter with the number of farmers expecting conditions to improve now only slightly outweighing those expecting conditions to worsen.

“Concern over Mycoplasma bovis was the main reason cited for farmer pessimism,” she said.

“Farmers’ expectations of their own farm business performance are down on last quarter but remain at elevated levels, particularly for horticulturalists.

“Investment intentions remain strong and increased slightly and farmers’ perceptions of their own farm business viability are marginally up and now at a record high.”

Ms Gourley said of the 24 percent of farmers expecting the agricultural economy to deteriorate, 78 percent of these cited Mycoplasma bovis and the consequences of the eradication process as the key reason for holding that view.

“Government intervention was the second predominant reason for farmer pessimism, however, this was cited far less frequently than in previous quarters.”

The survey found overall confidence in the broader agricultural economy had been driven lower by reduced expectations among sheep and beef farmers and horticulturalists.

“Net confidence dropped sharply among sheep and beef farmers to minus six percent (from +11 percent previously) while among horticulturalists it fell to minus ninepercent (from +34 percent previously). Dairy farmer confidence remained robust, rising slightly to plus-14 percent (from +11 percent previously).

For drystock farmers, and particularly those reliant on trading or grazing third party livestock for the dairy sector, Ms Gourley said the greater pessimism recorded this quarter was driven by uncertainty about how the decision to eradicate Mycoplasma bovis would impact on their businesses.

“Many operations will need to revisit their existing business models in the longer term, but in the short term there is still a significant level of uncertainty as testing for the disease continues and the ramifications of the disruption across the supply chain continues.”

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