15 Jun 2011

Indications that farmers in a spending mood - economist

9:25 am on 15 June 2011

Waikato University agricultural economist Stuart Locke says all indications are that farmers will be in a spending mood at the National Agricultural Fieldays, which open at Mystery Creek on Wednesday.

Dr Locke, the director of the university's business research institute, says the Fieldays event is the barometer of farmer spending.

High commodity prices across all sectors, coupled with a bumper dairy payout forecast, mean expectations among exhibitors is high.

Dr Locke also says it is likely that some farmers will prefer to use any extra money to repay debt and buy new equipment.

''I think that the cheque books are going to be open this year,'' he said.

''There's probably some tired equipment on the farms. Sales of parts have been up.''

Dairy NZ also says farmers are still being very cautious with their spending.

Chief executive Tim Mackle says most have used their better returns to repay debt in the past six to nine months.

''It's quite difficult to say how much farmers will spend this year,'' he said.

''Farmers overall are cautious, they've seen what happened in the world economy.''

He says Reserve Bank figures show that $1 billion of bank lending has been repaid over the past six to nine months.