Farmer confidence has risen to its highest point since August 2008 as the New Zealand dollar weakens and the drought is effectively over.
The Rabo Rural Confidence Survey for June says farmer confidence has rallied on the back of stronger dairy prices, a looming shortage of lambs and a weakening currency.
In the quarterly survey of approximately 450 farmers, 55% expected improved performance of their own business in the next year compared with 42% three months earlier while only 10% thought things would get worse.
Hayley Moynihan from Rabobank says a sharp lift in milk price expectations and good autumn conditions aiding a swift recovery from the drought have helped build up confidence.
She says the biggest jump in confidence has come from sheep and beef producers, who had been badly hit by low prices and drought over the last 12 months. Prices are now firming and a shortage of supply of lamb in New Zealand and other countries will make a difference to prices.
Among horticulturalists, 41% of those survyed expect the rural economy to improve over the next 12 months, up from 18% in the previous quarter.