22 Sep 2015

Bull beef prices behind optimisim in sector confidence

3:36 pm on 22 September 2015

A new Rabobank survey shows high beef prices are behind a glimmer of optimism in the sheep and beef sector, but low dairy prices are weighing down farmers' confidence.

The Rabobank Rural Confidence Survey, taken in August and September, questioned 450 farmers.

It showed respondents have had a small upswing in confidence - but sentiment continues to hover around decade lows.

Rabobank's general manager of Country Banking New Zealand, Hayley Moynihan said the survey revealed more than half of the farmers are looking to change their farm management systems to become less intensive over the next two years.

Seventy one percent of dairy farmers were looking to reduce stock numbers and/or feed inputs to help counter lower farmgate milk prices.

However, Ms Moynihan says higher bull beef prices - up 33 percent on last year - had left sheep and beef farmers feeling increasingly positive about their businesses, with 90 percent looking to increase or maintain investment on their farms.

"Optimism from sheep and beef farmers is primarily around beef prices and relative stability in lamb prices, but particularly the influence of the exchange rate, meaning that already good international prices for beef for example translate through to even better local farm gate prices.

"Farmer confidence is at the lowest levels overall that we've seen since 2009 and particularly with dairy farmer confidence, so that has been something we haven't seen for quite some years.

"It is impacting everything in terms of investment intentions and their expectations for expenditure over the next 12 months."

She said sheep and beef farmers were anxious the strengthening El Nino weather pattern could reduce feed availability.