Farmer confidence has dropped sharply, influenced by the high New Zealand dollar and its effect on export returns, and continuing concern about commodity prices, especially in the dairy sector.
The Rabobank survey of 450 farmers showed a net 37% of respondents believe the rural economy will deteriorate over the next 12 months, compared with a net 6% expecting condtions to worsen in the previous survey.
The sharp deterioration in sentiment is due to a 14% rise in the New Zealand dollar since the last survey, declining global dairy prices and worries about the global economy.
Rabobank says a net 7% expect their own businesses to be worse off over the next 12 months, compared to a net 11% expecting an improvement.
Sheep and beef farmers have shown the biggest fall in optimism.
It is the third consecutive survey to record a decline in farmer confidence levels.
Agriculture accounts for nearly half of New Zealand's $43 billion in annual export earnings.