Dairy farmers are now leading the rural sector with the most confidence in the economy, compared with being the most pessimistic six months ago, according to a Federated Farmers survey.

A significant majority of dairy farmers expect improvements both in the economy and in their own farm’s profitability. They also expect to increase production and on-farm spending while tackling debt.

“On the flipside, both sheep and beef farmers and, to a lesser extent, grains farmers, have become the least optimistic. The prices these farmers receive as well as the high exchange rate are impacting on-farm returns and overall financial viability,” says Feds president Don Nicholson.

In general farmer confidence has significantly improved from the ‘depression-like’ levels recorded six months ago, the survey shows

“Federated Farmers remains concerned about the international economy we depend upon.

“We still see risk of a ‘W’ shaped recession. As exporters, we’re aware of the negative sentiment coming out of the United States and Europe with a tightening bias in China.

Nicholson says dairy farmers also want clarity from the Government on its climate change policies, as regulatory uncertainty is affecting long-term investment decisions.

“Farmers see public spending as a reason why the dollar remains stubbornly high and is adding to inflationary pressures they will bear the brunt of when the Reserve Bank initiates tightening. Public spending is also delaying a rebalancing of the economy in favour of the tradable sector, too,” he says.

“With less than seven cents out of every export dollar [remaining] in the pockets of farmers, getting a fairer share of the billions we generate for New Zealand is a major priority going forward.”