Farmer confidence is plunging in the face of the European debt crisis and diving commodity prices, with expectations of worse times ahead for the economy and lower farm profits, according to a survey.
The Federated Farmers survey shows a net 38.7 per cent of respondents expect general economic conditions to worsen over the next 12 months, down 34.3 points from January.
The dive in confidence follows one of the best growing seasons recently for farmers, with near record carcase weights for slaughtered livestock and milk solids production up more than 11 per cent in the March quarter, compared with last year.
But the Federated Farmers survey shows a net 39.5 per cent of respondents now expect their own farm's profitability to worsen over the next 12 months, plummeting a massive 71.1 points on January.
"In January, the mid-way point for the 2011/12 season, farmer confidence in their profitability was strong. This has gone fully into reverse gear with most farmers now expecting farm profitability will worsen over the coming year," Federated Farmers president Bruce Wills said.
"While a drop in sentiment was expected, its size wasn't. The 2011/12 season was probably one of the best in recent times for dairy, meat and wool and would be near impossible to top. Instead of a slight easing, farmer confidence found the trap door and jumped right in.
"The past few months have seen large falls in commodity prices, with the June 2012 ANZ World Commodity Price Index down 12.3 percent from January. The exchange rate has not fallen to the same extent so has eaten into farmgate returns.
"As farmers are exporters, the European sovereign debt crisis has been extremely negative on sentiment. That comes on top of weak growth out of Japan and the United States."
- © Fairfax NZ News
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