A rural confidence survey shows the dairy downturn has dragged down farmer confidence to its lowest level in almost ten years.
The Rabobank Survey found pessimists out number optimists, with 56 percent of those surveyed expecting conditions in the rural economy to worsen.
The survey showed farmer confidence had sunk to its lowest level since early 2006.
Rabobank chief executive Ben Russell said the drop in confidence was driven by the slump in global dairy prices.
He said as farmers tightened up on spending, it was having a significant impact on other agricultural sectors and service providers.
He said dairy farmers interest in investment had also weakened, with only eight percent of people looking to expand over the coming year.
However, sheep and beef farmers' outlook remained unchanged from the previous survey, with 52 percent expecting a similar farm business performance to last year.
And it was an almost even split as to whether they believed conditions would improve or deteriorate in the sheep and beef sector.