New Zealand farmers' confidence slumped to its lowest level in nine years in the second quarter as sharply lower dairy prices and the prospect of little improvement in the near term weighed on sentiment, a survey showed on Tuesday. A Rabobank survey said a net 45 percent of respondents were negative about the general outlook for the farming sector over the next 12 months compared with a next 13 percent positive level in the first quarter survey.
It was the lowest farmer confidence level since early 2006 in a country which earns more than half of its NZ$49 billion ($33.63 billion) annual export earnings from agricultural produce. "In recent months we have seen the weakness in dairy prices contribute to sluggish growth in the New Zealand economy, weighing on the dollar and increasing expectations of further interest rate cuts," Rabobank New Zealand chief executive Bruce Russell said.
Dairy farmer sentiment was deeply pessimistic in the second quarter compared with being modestly positive in the first quarter, when there had been a short-lived bounce in prices. Global dairy prices have resumed falling and are now less than half their level at the start of 2014 because of increased supply and reduced demand, which has led dairy giant Fonterra to slash its forecast payout to suppliers.
Sheep and beef producers' sentiment was flat after a short drought in some regions. A net 17 percent of respondents were pessimistic about their own individual outlook against a net 14 percent optimism level in previous quarter, which led to more farmers planning to cut investment. Other New Zealand business and consumer confidence surveys have shown sentiment falling markedly on slowing domestic growth and an uncertain global outlook.
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