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NZ farmer confidence bounces back

NZN 27/06/2016 Sophie Boot

New Zealand farmer confidence bounced in the second quarter to the first net positive reading in more than a year, with a significant upswing across all sectors as rising dairy prices fuelled positivity.

A net 3 per cent of farmers were optimistic about the outlook for the agricultural economy over the next 12 months, from net 42 per cent pessimistic in the previous quarter, and the first time optimists outnumbered pessimists since March 2015, Rabobank's latest rural confidence survey says.

A quarter of farmers expected conditions to improve, up from 11 per cent last quarter, and 22 per cent expected conditions to worsen, down from 53 per cent. About 52 per cent expected similar conditions, up from 34 per cent.

"Since the last survey was undertaken in early March, dairy prices have increased in five of the last seven GlobalDairyTrade (GDT) auctions and Fonterra posted an opening forecast farm gate milk price for the 16/17 season of $4.25," Rabobank New Zealand general manager for country banking Hayley Moynihan said.

"While neither the auction prices nor the forecast price will have convinced farmers that the dairy sector is out of the woods, prices are, however, showing signs that global supply and demand for dairy products is rebalancing and will eventually reach a more sustainable level."

Last year's slump in dairy prices weighed on the rural sector, and government figures today showed exports of milk powder, butter and cheese were down 10 per cent to $11.13 billion in the year ended May 31.

Rabobank's Moynihan said the size of the dairy industry meant the modest improvement in dairy prices and expectations prices will continue to rise were likely to be the biggest factors in overall farmer confidence improving.

Investment intentions rose to their highest level for more than a year, with 25 per cent of farmers expecting to increase investment in their farm businesses up from 21 per cent in the previous quarter.

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