Federated Farmers New-Season Farm Confidence Survey - July 2020 - Interest.co.nz
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Farm Confidence Survey researchfirst.co.nz Federated Farmers New-Season Farm Confidence Survey July 2020
Farm Confidence Survey researchfirst.co.nz
Federated Farmers
New-Season Farm Confidence Survey
July 2020
2Farm Confidence Survey researchfirst.co.nz
1 Summary 4
1.1 Introduction 5
1.2 Key Messages 5
2 General Economic Conditions 6
2.1 Overall 7
2.2 Industry Groups 9
2.3 Regions 10
3 Farm Profitability 12
3.1 Overall 13
3.2 Industry Groups 15
3.3 Regions 16
4 Farm Production 18
4.1 Overall 19
4.2 Industry Groups and Regions 20
5 Farm Spending 22
5.1 Overall 23
5.2 Industry Groups and Regions 24
6 Farm Debt 25
6.1 Overall 26
6.2 Industry Groups and Regions 28
7 Trends in Farmer Confidence 30
8 Ability to Recruit 33
8.1 Overall 34
8.2 Industry Groups and Regions 36
9 Greatest Concerns 37
9.1 Overall 38
10 Highest Government Priorities 42
10.1 Overall 43
11 About this Survey 46
11.1 Research Design 47
11.2 About Net Scores 48
12 Appendix 49
12.1 July 2020 Respondents by Industry Group and Location 50
12.2 What is Your Main Business Activity? 50
12.3 Secondary Farming Details 51
12.4 Further Survey Detail 51
Disclaimer:
Research First notes that the views presented in the report do not necessarily represent the views of
Federated Farmers. In addition, the information in this report is accurate to the best of the knowledge
and belief of Research First Ltd. While Research First Ltd has exercised all reasonable skill and care in
the preparation of information in this report, Research First Ltd accepts no liability in contract, tort, or
otherwise for any loss, damage, injury or expense, whether direct, indirect, or consequential, arising
out of the provision of information in this report.
3Farm Confidence Survey researchfirst.co.nz
Summary
1 4Farm Confidence Survey researchfirst.co.nz
1.1 Introduction
This report summarises the results of the July 2020 Federated Farmers’ New-
Season Farm Confidence survey. The survey is undertaken twice a year (in
January and July); this study is the 23rd iteration. The survey was completed for
Federated Farmers by Research First, New Zealand’s leading agricultural market
Most Profitable Region research company.
Otago-Southland
1.2 Key Messages
The July 2020 survey observed a significant decrease in farmer confidence
returning to the decline that has been evident as a trend since July 2017 and
reveals the lowest level of farm confidence since the survey began in 2009. Key
points follow:
Most Profitable Industry • General economic conditions (current): A net 28.6% percent of respondents
Arable consider current economic conditions to be bad, a 53-point reduction on
January 2020’s survey when a net 24.6% consider them to be good.
• General economic conditions (expectations): A net 58.7% of respondents expect
general economic conditions to worsen over the next 12 months, a 17-point
reduction on January 2020’s survey when a next 41.5% expected them to
worsen.
• Farm profitability (current): A net 46.7% of respondents reported making a
Most Profitable Region profit currently, a 9-point reduction on January 2020’s survey when a net 55.8%
(looking ahead): reported making a profit.
Auckland-Northland • Farm profitability (expectations): A net 35.5% of respondents expect their
profitability to worsen over the next 12 months, a 38-point reduction on January
2020’s survey when a net 2.7% expected it to improve.
• Farm production (expectations): A net 16.1% of respondents expect their
production to increase over the next 12 months, a 4 point increase on January
2020’s survey when a net 12.5% expected it to increase.
• Farm spending (expectations): A net 12.8% of respondents expect their
Most Profitable Industry spending to reduce over the next 12 months, a 30-point decrease on January
(looking ahead): 2020’s survey when a net 17.3% expected it to increase.
Arable • Farm debt (expectations): A net 24.8% of respondents expect their debt to
reduce over the next 12 months, a 10-point decrease on January 2020’s survey
when a net 34.4% expected it to reduce.
• Ability to recruit (experienced): A net 28.1% of respondents reported it has been
harder to recruit skilled and motivated staff, a 13-point reduction on January
2020’s survey when a net 41.3% reported it has been harder.
• Greatest concerns (current): The three greatest concerns for farmers are
Greatest Concern to Farmers:
the economic situation (chosen by 15.6% of respondents), regulation and
Economic Situation compliance costs (15.3%), and farmgate and commodity prices (11.1%).
This compares to January 2020’s survey when the top three concerns were
regulation and compliance costs (20.2%), climate change policy & ETS (17.2%),
and freshwater policy (10.7%).
• Highest government priorities (current): The three highest priorities farmers
would like the government to address are the economy & business environment
Highest Priority for Government: (36.8%), fiscal policy (12.1%), and supporting agriculture & exporters (10.3%).
Economy and Business This compares to January 2020’s survey when the top three priorities were
Environment economy & business environment (23.4%), regulation and compliance costs
(14.2%), and supporting agriculture & exporters (10.3%).
5Farm Confidence Survey researchfirst.co.nz General Economic Conditions 2 6
Farm Confidence Survey researchfirst.co.nz
2.1 Overall
Since the previous survey, there has been a substantial increase in the net
number of respondents with a negative perception of current economic
conditions. The July net score of -29 was down 53 points from January 2020.
This large drop in net scores has not been seen since July 2016 (Table 2.1).
Just 11% of farms perceive general economic conditions to be good (down 27
points from January 2020), compared to 40% perceiving them to be bad (up
by 26 points). However, continuing previous survey trends, about half of the
farmers consider economic conditions to be neither good nor bad. Given the
economic impacts of Covid-19 and the response to it (border closure, lockdowns,
etc.), that so many farmers consider current conditions to be neutral, could be
considered a small positive.
Table 2.1 Current perceptions of general economic conditions for all farms
Good
Bad General
General Neither January
Economic July 2020
Economic Good nor Don’t Know 2020 Net Change
Conditions Net Score*
Conditions Bad Score
Currently
Currently
All Farms 11.1% 46.7% 39.7% 2.6% 24.6 -28.6 -53.2
*Please refer to Section 11.2 for more information about net scores
Looking ahead, there has also been a sharp drop in sentiment about general
economic conditions, more than reversing the improvement seen in January
(Figure 2.1). Since peaking in July 2017, expectations about general economic
conditions have fallen with each subsequent survey, except January 2020.
At -59, this survey result shows the lowest level of farm confidence in the general
economy since the survey commenced in July 2009 (Table 2.2).
Compared to six months ago optimists have increased slightly to 7.4% (up by 3
points), while pessimists have increased by 20 points, equating to two-thirds of
all farms. Fewer farms expect general economic conditions to stay the same as
six months ago (down 25 points), and at 21% this is the lowest level in the history
of the farm confidence surveys.
Concern about the global economy is weighing on sentiment. The disruption
caused by the impact of Covid-19 on trade and fears of a lasting global recession
and heightened protectionism and trade wars is likely to be a large factor in the
negative forward-looking expectations. This fall in expectations is echoing the
fall in business and consumer confidence, and the fall in the domestic economy
from Covid-19.
7Farm Confidence Survey researchfirst.co.nz
Table 2.2 Predictions of general economic conditions for all farms over the next 12
months
January
July 2020
Improve Stay Same Worsen Don’t Know 2020 Net Change
Net Score
Score
All Farms 7.4% 21.0% 66.1% 5.4% -41.5 -58.7 -17.2
Figure 2.1 shows how the net scores for predicted general economic conditions
have tracked over the life of the survey. The net scores have oscillated over the
past eleven years, which shows that perceptions about the general economy can
be volatile, but the trend since July 2017 has been clearly downward.
Figure 2.1 Net predictions of general economic conditions for all farms (July 2009-
July 2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
8Farm Confidence Survey researchfirst.co.nz
2.2 Industry Groups
All industry groups have seen a worsening in perceptions about current
economic conditions, with the 70 point slump for meat and wool farmers
particularly dramatic considering they had been very positive in January. Arable
farmers are the most negative but their 15 point fall from January was relatively
modest. Dairy farmers are the least negative, but all industry groups fell
between -27 and -35 (Table 2.3).
All industry groups had between 46-47% of respondents considering economic
conditions to be neither good nor bad, which again could be taken as a positive
in the current economic climate.
Table 2.3 Current perceptions of general economic conditions by industry group
Good
Bad General
General January
Neither Good Economic July 2020
Economic Don’t Know 2020 Net Change
nor Bad Conditions Net Score
Conditions Score
Currently
Currently
Dairy 11.7% 46.3% 39.1% 2.9% 18.5 -27.4 -45.9
Meat & Wool 10.8% 46.3% 40.8% 2.0% 40.0 -30.0 -70.0
Arable 8.8% 47.4% 43.9% 0.0% -20.0 -35.1 -15.1
Other 9.1% 46.8% 41.6% 2.6% 17.4 -32.5 -49.9
When looking ahead over the next 12 months, all farm groups expect general
economic conditions to worsen. The Other group was the most pessimistic with
73% expecting economic conditions to become worse and a net score of -67.5.
Meat & Wool and Dairy were relatively less pessimistic but still, pessimists
outnumber optimists by a factor of almost seven to one (Table 2.4). About one in
five farms in all industry groups expect conditions to stay the same, down from
an average of just under 50% six months ago.
Table 2.4 Predictions of general economic conditions by industry group
January
July 2020
Improve Stay Same Worsen Don’t Know 2020 Net Change
Net Score
Score
Dairy 7.4% 21.6% 65.1% 5.9% -34.6 -57.7 -23.1
Meat & Wool 7.5% 20.2% 67.2% 5.2% -48.4 -59.7 -11.2
Arable 7.0% 19.3% 68.4% 5.3% -68.0 -61.4 6.6
Other 5.2% 20.8% 72.7% 1.3% -47.8 -67.5 -19.7
9Farm Confidence Survey researchfirst.co.nz
2.3 Regions
All seven regions have negative net scores for current economic conditions, with
West Coast-Tasman-Marlborough having the largest negative net score change,
and East Coast North Island, the smallest negative net score. The Meat & Wool
dominant East Coast North Island remains the region with the highest percent
stating good general economic conditions, followed by Otago-Southland, and
Taranaki-Manawatu (Table 2.5).
West Coast-Tasman-Marlborough had the biggest change in net score since
January, down 70.5 points, while Auckland-Northland had the smallest change,
down 41 points.
Table 2.5 Current perceptions of general economic conditions by region
Good
Bad General
General January
Neither Good Economic July 2020
Economic Don’t Know 2020 Net Change
nor Bad Conditions Net Score
Conditions Score
Currently
Currently
Auckland-Northland 6.9% 51.1% 40.5% 1.5% 7.5 -33.6 -41.1
Waikato-Bay of Plenty 8.7% 47.1% 41.0% 3.3% 23.3 -32.3 -55.6
East Coast North Island 16.1% 48.2% 33.7% 2.1% 44.2 -17.6 -61.8
Taranaki-Manawatu 12.7% 46.2% 38.2% 2.8% 17.7 -25.5 -43.2
West Coast (WC)-Tasman-
6.7% 42.2% 46.7% 4.4% 30.5 -40.0 -70.5
Marlborough
Canterbury 11.6% 45.7% 40.8% 1.9% 22.4 -29.3 -51.7
Otago-Southland 12.4% 46.0% 39.1% 2.5% 26.4 -26.7 -53.1
Looking ahead, all seven regions have considerably more respondents
expecting general economic conditions to worsen over the next 12 months rather
than improving. Also, all seven regions had relatively low percentages expecting
conditions to stay the same.
10Farm Confidence Survey researchfirst.co.nz
All seven regions had decreases in their net scores, with the largest decrease in
Waikato-Bay of Plenty (down 27 points) followed by Auckland-Northland (down
23 points). The smallest changes were for East Coast North Island and Otago-
Southland (each down 11 points) -Table 2.6.
Table 2.6 Predictions of general economic conditions by region
January
July 2020
Improve Stay Same Worsen Don’t Know 2020 Net Change
Net Score
Score
Auckland-Northland 7.6% 11.5% 75.6% 5.3% -45.3 -67.9 -22.7
Waikato-Bay of Plenty 8.0% 18.3% 68.1% 5.6% -33.4 -60.2 -26.8
East Coast North Island 7.3% 26.9% 62.2% 3.6% -44.2 -54.9 -10.7
Taranaki-Manawatu 9.2% 25.5% 57.8% 7.6% -35.7 -48.6 -12.9
West Coast (WC)-Tasman-
10.0% 22.2% 63.3% 4.4% -40.2 -53.3 -13.1
Marlborough
Canterbury 4.8% 20.9% 68.8% 5.5% -47.1 -64.0 -16.9
Otago-Southland 7.1% 21.4% 66.5% 5.0% -48.2 -59.3 -11.1
11Farm Confidence Survey researchfirst.co.nz Farm Profitability 3 12
Farm Confidence Survey researchfirst.co.nz
3.1 Overall
In July 2020, more than half of farms reported being currently profitable. A
further 30% are just breaking even and only 11% are making a loss. Compared to
the last survey, the net score for current profitability decreased by 9 points to
+47 (Table 3.1). The proportion of farms making a loss has increased by half over
the past six months, although it is nowhere near the low in July 2016 when 43%
reported making a loss.
Lower commodity prices, including for both Meat & Wool and Dairy, have
lessened farmgate incomes, and drought has impacted on production in many
areas. That said, the current profitability of farming is relatively favourable
compared to many other industries in the wider community.
Table 3.1 Current perceptions of profitability: all farms
January
Making a Breaking Making a Rather not July 2020
Don’t Know 2020 Net Change
Profit Even Loss Say Net Score
Score
All farms 57.3% 28.9% 10.6% 2.5% 0.8% 55.8 46.7 -9.1
Not so positive is a dramatic decrease in expectations for profitability over the
next 12 months and the net score has decreased by -38 points compared to
January’s survey.
Compared to January 2020 the proportion of farmers expecting their
profitability to improve has halved (down by 12 points to 12%), and those
expecting it to worsen has more than doubled (from 21% up to 48%). Only one-
third expect profitability to stay the same, which is similar to survey results
previous to January 2016 (Table 3.2).
The decrease in net score predications of farm profitability over the next 12
months reflects expectations of a disrupted global economy and lingering
effects of the recent drought, which in many areas will dampen production levels
and push up input costs.
Table 3.2 Predictions of farm profitability over the next 12 months: all farms
January
July 2020
Improve Stay Same Worsen Don’t Know 2020 Net Change
Net Score
Score
All farms 12.1% 35.9% 47.6% 4.4% 2.7 -35.5 -38.2
13Farm Confidence Survey researchfirst.co.nz
Figure 3.1 illustrates the net predictions of all farm profitability since July 2009,
which, similar to economic predictions (Figure 2.1), has oscillated markedly over
time, but has been trending down since July 2017.
Figure 3.1 Net predictions of all farm profitability (July 2009–July 2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
14Farm Confidence Survey researchfirst.co.nz
3.2 Industry Groups
All industry groups continue to have more farms reporting making a profit
than making a loss (Table 3.3). Farms making a loss are in a small minority
across the board, but the numbers have increased over the past six months as
demonstrated by the negative changes in net scores for all industry groups,
except for Arable farms.
Arable farms have seen a noticeable increase in farms making a profit with a net
change increase of +40 points that equates to a near doubling of farms making
a profit compared to six months ago (when only one-third reported making a
profit). Supplementary feed has been in strong demand over recent months.
In contrast, Meat & Wool have seen a noticeable decrease in profitability from
72% in January 2020 down to 56% in this survey iteration and more farms are
making a loss (14% compared to 4% six months ago). Lower prices for beef
and lamb (albeit off recent highs), depressed wool prices, and drought will be
weighing heavily on Meat and Wool farmers.
Over the past four years, there has been a big decline in Dairy farmers reporting
making a loss, down from 60% in July 2016 to 9% in January 2020. This reflects
the continued recovery from the 2014-16 dairy downturn.
Table 3.3 Current farm profitability by industry group
January
Making a Breaking Making a Rather not July 2020
Don’t Know 2020 Net Change
Profit Even Loss Say Net Score
Score
Dairy 59.9% 28.0% 9.1% 2.4% 0.5% 53.1 50.8 -2.3
Meat & Wool 55.7% 28.5% 13.5% 2.3% 0.0% 68.7 42.2 -26.5
Arable 63.2% 26.3% 7.0% 1.8% 1.8% 16.0 56.1 40.1
Other 54.5% 31.2% 10.4% 2.6% 1.3% 50.0 44.2 -5.8
Looking ahead, most industry groups had a decline in profitability expectations
compared to January’s survey. Arable farmers bucked the trend with a 9-point
increase. The other industry groups are leaning to an uneven balance between
pessimists and optimists of about four to one as shown by their net scores going
negative. This is particularly evident for Dairy farms and to a lesser extent, Meat
& Wool farms (Table 3.4).
The negative sentiment by the Dairy farms may reflect the wide-ranging milk
price forecast for the new season that is reflecting global uncertainty, with the
mid-price for the 2019/20 season set at $7.20 per kilogram of milk solids (since
reduced to $7.10). For 2020/21 Dairy farmers may have to prepare for a lower
return of under $6 in the forthcoming season1 due to a reduction in overseas
consumer spending power, with Fonterra’s forecast range at the time of the
survey being $5.40-6.90 and a midpoint of $6.15 (since revised to a range of
$5.90-6.90 and a midpoint of $6.40).
1 https://www.fonterra.com/nz/en/our-stories/media/fonterra-provides-performance-and-milk-
price-updates.html
15Farm Confidence Survey researchfirst.co.nz
Table 3.4 Predictions of expected farm profitability by industry group
January
July 2020
Improve Stay Same Worsen Don’t Know 2020 Net Change
Net Score
Score
Dairy 11.3% 32.5% 52.1% 4.1% 8.5 -40.8 -49.3
Meat & Wool 12.2% 37.5% 45.7% 4.7% -1.9 -33.5 -31.6
Arable 12.3% 50.9% 35.1% 1.8% -32.0 -22.8 9.2
Other 15.6% 42.9% 40.3% 1.3% 0.0 -24.7 -24.7
3.3 Regions
Six of seven regions have seen reductions in net scores for current profitability
although all seven regions continue to positive net scores for profitability
(meaning more farms are making a profit than a loss).
Auckland-Northland is the least profitable region, with 43% of respondents
reporting making a profit and the lowest net score of +27, but it was the one
region to see an increase in its net score compared to January. Auckland-
Northland was one of the worst affected regions by the drought, but it broke
early enough to allow grass growth before winter.
In contrast, Otago-Southland and Canterbury are the most profitable of the
regions (nearly two-thirds are making a profit). These were regions less affected
by the drought.
The East Coast North Island region has seen the largest decrease in their net
change score of -32 points. This region, especially the Hawkes Bay, was also
badly affected by the drought and with the drought not breaking until the onset
of winter, its impacts are still severe and will linger deep into the coming season
(Table 3.5).
Table 3.5 Current farm profitability by region
January
Making a Breaking Making a Rather not July 2020
Don’t Know 2020 Net Change
Profit Even Loss Say Net Score
Score
Auckland-Northland 42.7% 36.6% 16.0% 3.1% 1.5% 25.5 26.7 1.2
Waikato-Bay of
51.5% 31.1% 13.6% 2.8% 0.9% 49.9 37.9 -11.9
Plenty
East Coast North
57.0% 28.0% 13.0% 1.6% 0.5% 76.2 44.0 -32.2
Island
Taranaki-Manawatu 56.2% 33.9% 6.8% 2.0% 1.2% 55.0 49.4 -5.6
WC-Tasman-
57.8% 28.9% 12.2% 1.1% 0.0% 50.0 45.6 -4.4
Marlborough
Canterbury 65.0% 21.9% 8.7% 3.9% 0.6% 58.3 56.3 -2.0
Otago-Southland 64.3% 26.1% 7.5% 1.9% 0.3% 61.1 56.8 -4.2
16Farm Confidence Survey researchfirst.co.nz
Looking ahead, all seven regions are in negative territory for profitability
expectations, which is in direct contrast to January 2020 when five of the seven
regions were looking positive. The regions with the lowest net scores were
West Coast-Tasman-Marlborough (-46), followed by Canterbury (-45), while
Auckland-Northland had the highest net score, albeit still deeply negative
(-27.5). The number of farms who are unsure about future profitability has
increased markedly in some of the North Island regions.
West Coast-Tasman-Marlborough had the biggest decline in net score
compared to January’s survey (down 52 points), while Auckland-Northland had
the smallest decline (down 25 points).
Table 3.6 Predictions of expected farm profitability by region
January
July 2020
Improve Stay Same Worsen Don’t Know 2020 Net Change
Net Score
Score
Auckland-Northland 12.2% 41.2% 39.7% 6.9% -2.8 -27.5 -24.7
Waikato-Bay of Plenty 13.6% 34.9% 48.0% 3.5% 5.7 -34.4 -40.1
East Coast North Island 15.5% 33.7% 48.2% 2.6% 5.0 -32.6 -37.6
Taranaki-Manawatu 12.7% 35.9% 43.8% 7.6% 4.4 -31.1 -35.5
WC-Tasman-Marlborough 6.7% 37.8% 52.2% 3.3% 6.1 -45.6 -51.7
Canterbury 8.7% 34.1% 53.7% 3.5% -1.2 -45.0 -43.9
Otago-Southland 12.4% 37.6% 45.7% 4.3% 0.7 -33.2 -33.9
17Farm Confidence Survey researchfirst.co.nz Farm Production 4 18
Farm Confidence Survey researchfirst.co.nz
4.1 Overall
The July 2020 survey shows farmers’ expectations about future production have
increased slightly after falling over the previous 2 years (Figure 4.1). Although
the majority of farmers (59%) still expect their production to remain similar, the
proportion of those expecting it to increase has increased to 28% (up 4 points
compared to six months ago), while those with more pessimistic views about
farm production have stabilised at 12%. As a result, the net score has increased
by +3.6 points (Table 4.1).
The improvement in production expectations for the next 12 months may reflect
drought-affected farmers expecting their production to recover to more normal
levels. They will be hoping weather conditions are kinder in 2020/21. Longer-
term, downward pressure of the past few years is likely to resume due to the
impacts of environmental limits being set through RMA plans and policies and
afforestation driven by the ETS, overseas investment rules, and the One Billion
Trees programme (Figure 4.1).
Table 4.1 Predictions of farm production over the next 12 months: all farms
January
July 2020
Increase Stay Same Reduce Don’t Know 2020 Net Change
Net Score
Score
All farms 28.2% 58.6% 12.1% 1.2% 12.5 16.1 3.6
Figure 4.1 Net predictions of farm production: all farms (January 2010–July 2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
19Farm Confidence Survey researchfirst.co.nz
4.2 Industry Groups and Regions
All industry groups have more farmers expecting to increase production over the
coming year rather than reduce production, but it is very much a story of dairy
versus the rest. Dairy farmers have the highest net score for production and their
next score has increased significantly. This is probably due to milk production
slipping in the second half of the 2019/20 season due to drought in many areas
and this is expected to recover back to more normal levels.
In contrast, the other industry groups saw large reductions in production
expectations. Drought over much of the country caused Meat and Wool farmers
to quit stock, including capital stock, which will have implications for the coming
season. Arable farmers are the least optimistic going forward but this possibly
reflects their starting point which was an excellent 2020 harvest.
Table 4.2 Predictions of future farm production by industry group
January
July 2020
Increase Stay Same Reduce Don’t Know 2020 Net Change
Net Score
Score
Dairy 30.4% 61.0% 7.6% 1.0% 5.6 22.8 17.2
Meat & Wool 25.8% 54.2% 19.2% 0.8% 19.4 6.7 -12.7
Arable 17.5% 66.7% 15.8% 0.0% 26.0 1.8 -24.2
Other 29.9% 55.8% 11.7% 2.6% 27.2 18.2 -9.0
All seven regions have positive net scores for future farm production. This
was led by the dairy intensive regions of Waikato-Bay of Plenty and Otago-
Southland, with net scores of +22.5 and +27.6 respectively. They also had the
biggest increases compared to January, up 18 points and 12 points, respectively.
The Meat & Wool dominant East Coast North Island was the most pessimistic
region with nearly one-quarter of farms expecting farm production to decrease
and the lowest net score of +3.6. It also had the biggest decline in net score,
down 22 points. East Coast North Island, but especially Hawkes Bay, was very
badly affected by the drought and its impacts on production will linger deep into
the 2020/21 season.
20Farm Confidence Survey researchfirst.co.nz
The increase in farm production for Dairy farms is in juxtaposition with their
expectations for decreased profitability, which is probably related to the fall in
forecast milk solid prices for the new season.
Table 4.3 Predictions of future farm production by region
January
July 2020
Increase Stay Same Reduce Don’t Know 2020 Net Change
Net Score
Score
Auckland-Northland 32.1% 52.7% 14.5% 0.8% 9.4 17.6 8.1
Waikato-Bay of Plenty 30.2% 60.9% 7.7% 1.2% 4.2 22.5 18.3
East Coast North Island 26.4% 48.2% 22.8% 2.6% 25.4 3.6 -21.8
Taranaki-Manawatu 23.5% 63.3% 12.0% 1.2% 9.2 11.6 2.3
WC-Tasman-Marlborough 23.3% 58.9% 17.8% 0.0% 7.3 5.6 -1.8
Canterbury 24.8% 58.2% 15.4% 1.6% 16.6 9.3 -7.3
Otago-Southland 33.2% 60.6% 5.6% 0.6% 15.7 27.6 11.9
21Farm Confidence Survey researchfirst.co.nz Farm Spending 5 22
Farm Confidence Survey researchfirst.co.nz
5.1 Overall
Farmers’ spending expectations for the next 12 months are down sharply on
January 2020, with its net score slumping 30 points. While just under one-
quarter expect their spending to increase, just over one-third (35%) of farmers
expect to reduce their spending, although 41% of farmers still expect their
spending to stay the same (Table 5.1).
Table 5.1 Predictions of expected farm spending over the next 12 months: all farms
January
July 2020
Increase Stay Same Reduce Don’t Know 2020 Net Change
Net Score
Score
All farms 22.4% 40.7% 35.2% 1.6% 17.3 -12.8 -30.1
The decrease in spending expectations goes against the modest increase in
expectations for farm production levels but mirrors the decrease in other survey
indicators such as farm debt, profitability expectations, and a decrease of
confidence in the sector (Figure 5.1). Large falls in interest rates have held on-
farm inflation low, which may have given farmers a reprieve on spending, but the
outlook is uncertain and it is too early to identify the effects of Covid-19 on farm
spending2,3. This suggests caution, especially for investment-related spending.
Figure 5.1 Net predictions of expected farm spending (July 2009—July 2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
2 https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/sheep-and-beef-on-farm-
inflation-low
3 https://www.asb.co.nz/documents/economic-research/commodities-weekly/farm-input-price-
inflation-lower-for-longer.html
23Farm Confidence Survey researchfirst.co.nz
5.2 Industry Groups and Regions
The overall decrease in spending expectations was mostly due to Meat & Wool,
and Dairy, and to a lesser extent Other farms, while Arable’s expectations
are almost unchanged and delicately balanced between those expecting it to
increase versus decrease (Table 5.2).
Table 5.2 Predictions of expected farm spending by industry group
January
July 2020
Increase Stay Same Reduce Don’t Know 2020 Net Change
Net Score
Score
Dairy 24.0% 39.4% 35.4% 1.2% 20.2 -11.5 -31.7
Meat & Wool 20.3% 40.3% 38.2% 1.2% 16.8 -17.8 -34.6
Arable 26.3% 45.6% 26.3% 1.8% 2.0 0.0 -2.0
Other 16.9% 48.1% 33.8% 1.3% 13.0 -16.9 -29.9
All seven regions have more farmers expecting to reduce spending than increase
spending, led by East-Coast North Island, with a net score of -23, while Waikato-
Bay of Plenty had the highest net score of -4.7.
East Coast North Island also had the biggest drop in net score, down 43 points
on January’s survey, followed by The Otago-Southland (down 34 points) and
West Coast -Tasman-Marlborough (down 37.5 points).
However, in five of the seven regions, more farmers still expect their spending to
stay the same rather than reduce (Table 5.3).
Table 5.3 Predictions of expected farm spending by region
January
July 2020
Increase Stay Same Reduce Don’t Know 2020 Net Change
Net Score
Score
Auckland-Northland 24.4% 39.7% 34.4% 1.5% 14.2 -9.9 -24.1
Waikato-Bay of Plenty 28.6% 36.8% 33.3% 1.4% 23.0 -4.7 -27.7
East Coast North Island 20.7% 34.2% 43.5% 1.6% 19.9 -22.8 -42.7
Taranaki-Manawatu 18.7% 49.8% 29.1% 2.4% 18.5 -10.4 -28.8
WC-Tasman-Marlborough 23.3% 37.8% 38.9% 0.0% 22.0 -15.6 -37.5
Canterbury 18.6% 45.0% 34.1% 2.3% 7.3 -15.4 -22.8
Otago-Southland 20.8% 39.8% 38.2% 1.2% 16.8 -17.4 -34.2
24Farm Confidence Survey researchfirst.co.nz Farm Debt 6 25
Farm Confidence Survey researchfirst.co.nz
6.1 Overall
Covid-19 has put pressure on bank customers and for farmers, the drought has
also been a big factor for many farmers, which banks have had to respond to. In
July 2020, 90.3% of farms have debt, up slightly from 88.9% six months ago.
Overall, there has been a slight net increase in farmer debt expectations over the
past six months, following net declines over the previous 18 months (Figure 6.1)
as banks tightened lending conditions for agriculture.
Of those farms with debt, just over 40% expect their debt to reduce over the
next 12 months, which is a noticeable decrease of -10 points compared to six
months ago (51%). Also, the number of farms expecting their debt to increase
has increased to 15% (up +3 points), while more farms (41%) expect their debt
to stay the same (up 5 points from January 2020). The net score of -28 is up 11
points on January’s result (Table 6.1).
Table 6.1 Predictions of future farm debt over the next 12 months: all farms
January
July 2020
Increase Stay Same Reduce Don’t Know No Debt 2020 Net Change
Net Score
Score
All farms 13.4% 36.9% 38.3% 1.7% 9.7% -34.4 -24.8 9.6
All Farms with Debt 14.9% 40.8% 42.4% 1.9% -38.7 -27.5 11.2
For most of the life of the survey more farmers have expected to reduce debt
than increase it, with the main exceptions being the periods following the Global
Financial Crisis in 2009 and January 2015 to July 2016 during the last prolonged
downturn in dairy prices, which forced many Dairy farmers to increase their
debt to get through. Since then there has been a return to the 2010-14 results
where more farmers expected to reduce debt than increase it (Figure 6.1).
This has been shown by Reserve Bank statistics which saw a reduction in total
agricultural debt over the past twelve months, especially for dairy farmers.
26Farm Confidence Survey researchfirst.co.nz
Although there has been an uptick in debt expectations since January’s survey,
more farmers continue to expect their debt to reduce rather than increase.
If there is a prolonged global economic downturn which impacts adversely
on commodity prices this could come under further pressure. There is little
likelihood though of banks turning on the taps to fund investment (e.g., farm
purchases and conversions) so that will put a limit on any expansion in farm
debt. Farm sales volumes are currently very low, running at only around 60% of
the levels seen as recently as two years ago.
Figure 6.1 Net predictions of future farm debt: all farms (July 2009 to July 2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
27Farm Confidence Survey researchfirst.co.nz
6.2 Industry Groups and Regions
All farm types have more farms expecting to reduce debt than increase debt.
Dairy continues to be the industry group with the highest proportion of those
expecting to reduce debt although their net score is up by 3 points over the past
six months.
Although Meat & Wool and Other farms are the less likely to have farm debt, they
are the two industry groups with the highest proportion of those expecting to
increase farm debt going forward. For meat and wool farmers this will be due to
a need for many of these farmers for bank support for working capital due to the
lagged effect of the drought and Covid-19.
Arable farmers bucked the trend with a reduction in debt net score, implying
more farmers expecting to reduce their farm debt compared to January’s survey.
Table 6.2 Predictions of farm debt by industry group
January
July 2020
Increase Stay Same Reduce Don’t Know No Debt 2020 Net Change
Net Score
Score
Dairy 10.7% 35.9% 47.5% 1.5% 4.4% -39.9 -36.7 3.2
Meat & Wool 17.5% 37.2% 29.5% 1.0% 14.8% -31.7 -12.0 19.7
Arable 10.5% 49.1% 28.1% 1.8% 10.5% -4.0 -17.5 -13.5
Other 14.3% 46.8% 19.5% 3.9% 15.6% -26.1 -5.2 20.9
All regions have more farms expecting to reduce debt compared to increasing
debt, with Taranaki-Manawatu expecting to have the largest reduction in debt,
followed by Waikato-Bay of Plenty and Otago-Southland.
28Farm Confidence Survey researchfirst.co.nz
West Coast-Tasman-Marlborough was the only region to have an upward
movement in its net score, possibly a reflection of many farmers in that region
have already paid down some debt from the Westland Milk Products’ sale, and
is the region with the least overall farm debt (Table 6.3). However, the other six
regions have had increases in their net scores.
Table 6.3 Predictions of farm debt by region
January
July 2020
Increase Stay Same Reduce Don’t Know No Debt 2020 Net Change
Net Score
Score
Auckland-Northland 16.0% 32.8% 35.1% 3.8% 12.2% -30.2 -19.1 11.1
Waikato-Bay of
11.9% 39.1% 38.6% 2.3% 8.0% -31.3 -26.7 4.6
Plenty
East Coast North
19.7% 32.6% 37.3% 0.5% 9.8% -45.9 -17.6 28.2
Island
Taranaki-Manawatu 12.0% 35.9% 41.0% 2.4% 8.8% -41.8 -29.1 12.7
WC-Tasman-
10.0% 34.4% 34.4% 0.0% 21.1% -19.5 -24.4 -4.9
Marlborough
Canterbury 11.6% 40.2% 36.3% 1.3% 10.6% -29.7 -24.8 5.0
Otago-Southland 14.6% 36.3% 40.4% 0.9% 7.8% -34.3 -25.8 8.5
29Farm Confidence Survey researchfirst.co.nz Trends in Farmer Confidence 7 30
Farm Confidence Survey researchfirst.co.nz
Figure 7.1 provides an overview of farmer confidence and how it varies over
time. The figure illustrates trends in farmer confidence (net scores) for five key
predictors of farm performance, as follow:
1. Economic conditions;
2. Profitability;
3. Production;
4. Spending; and,
5. Farm debt4.
Figure 7.1 shows that the net scores for all five forward-looking indicators have
fluctuated over time although, until the last three years, they have tended to
move together.
In this survey, ‘all farm’ perceptions of economic conditions, profitability, and
spending have deteriorated. ‘All farm’ confidence is at an all-time low since the
survey began in 2009, with a drop of 17 points since January 2020. But the most
dramatic change going forward was profitability (a drop of 38 points) moving
into negative territory not seen since 2015-16. Farm spending is also predicted
to decrease dramatically (down 30 points).
The only perception to improve was ‘all farm’ production, that has shown a
slight improvement over the past six months. Farm debt expectations are also
expected to drop by just under 10 points, implying a slowdown in the debt
reduction seen over the past two years.
There is now a closing gap between the negative sentiment for general
economic conditions and expected farm profitability and spending.
Farmers, like businesses generally, remain much more negative about
economic prospects over the coming year. The outlook for the global economy
due to Covid-19, trade wars, heightened protectionism and Brexit is naturally
concerning for export-oriented businesses like farmers but there is also
concern about some government policies, especially in the climate change and
environmental spaces, and tightening of rural lending.
4 Note that debt has been inverted to correct for polarity inconsistency, that is: an increase in debt in a
negative indication.
31Farm Confidence Survey researchfirst.co.nz
Figure 7.1 Net perceptions of five key indicators of overall farmer confidence: all
farms (July 2009-July 2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
Economic Profitability Production Spending Debt
32Farm Confidence Survey researchfirst.co.nz Ability to Recruit 8 33
Farm Confidence Survey researchfirst.co.nz
8.1 Overall
As in earlier surveys, farmers continue to have difficulty recruiting skilled and
motivated staff. The gap between those who had found it harder and those who
had found it easier narrowed by 13 points to a net score of +28, although this
is mainly due to an increase in ‘no change’ at the expense of those finding it
‘harder’ rather than an increase in those finding it ‘easier’.
Generally, the trend has increased slightly each survey iteration (Table & Figure
8.1) and despite the recent increase in unemployment and therefore potential
workers, very few farms are finding it easier to recruit staff.
Table 8.1 Ability to recruit skilled and motivated staff in the previous 6 months: all
farms
January
Don’t July 2020
Harder No change Easier Don’t Know 2020 Net Change
Employ Net Score
Score
All farms 31.1% 35.2% 3.0% 5.2% 25.5% 41.3 28.1 -13.2
Despite the impacts of Covid-19 on the labour market it continues to be evident
that farmers are finding it difficult to attract and retain suitable staff. Recent
restrictions from Covid-19 to immigration policy will be exacerbating the
problem (Figure 8.1), although the increase in internal unemployment may
offer some relief if New Zealanders are willing to work in the agricultural sector.
The Government in Budget 2020 announced it was making a $19.3 million
investment to boost 10,000 jobs and attract the recently unemployed into entry-
level training opportunities in the primary sector and rural New Zealand, so this
may assist with staffing in the near future5.
5 https://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid=12332102
34Farm Confidence Survey researchfirst.co.nz
Figure 8.1 Net ability to recruit skilled and motivated staff: all farms (July 2009-July
2020)
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
35Farm Confidence Survey researchfirst.co.nz
8.2 Industry Groups and Regions
All farms have experienced slightly less difficulty in their ability to recruit
suitably experienced and motivated staff over the past six months, but as noted
above this is mainly due to an increase in ‘no change’ at the expense of those
finding it ‘harder’ rather than an increase in those finding it ‘easier’. Of all farm
types, Meat & Wool and Arable farms have the lowest employment rate of staff
(Table 8.2). Dairy farms continue to find recruiting staff the most difficult, while
Meat & Wool farms have experienced less difficulty over the past six months.
Table 8.2 Difficulty to recruit skilled and motivated staff by industry group
January
Don’t July 2020
Harder No change Easier Don’t Know 2020 Net Change
Employ Net Score
Score
Dairy 37.4% 38.2% 3.0% 4.9% 16.4% 47.8 34.4 -13.4
Meat & Wool 21.8% 32.5% 3.2% 5.2% 37.3% 32.8 18.7 -14.1
Arable 22.8% 38.6% 0.0% 7.0% 31.6% 42.0 22.8 -19.2
Other 29.9% 36.4% 3.9% 6.5% 23.4% 44.6 26.0 -18.6
Taking a closer look at recruitment by regions, all regions continue to have more
respondents finding it harder than easier to recruit skilled and motivated staff
(Table 8.3). However, all regions experienced less difficulty compared to six
months ago, specifically West Coast-Tasman-Marlborough region. The other
regions saw smaller improvements in their ability to recruit suitable staff (Table
8.3).
Table 8.3 Difficulty to recruit skilled and motivated staff by region
January
Don’t July 2020
Harder No change Easier Don’t Know 2020 Net Change
Employ Net Score
Score
Auckland-Northland 29.8% 35.1% 0.8% 5.3% 29.0% 35.8 29.0 -6.8
Waikato-Bay of
31.9% 35.8% 4.4% 5.2% 22.7% 45.7 27.4 -18.3
Plenty
East Coast North
30.1% 38.9% 2.1% 5.2% 23.8% 46.4 28.0 -18.4
Island
Taranaki-Manawatu 27.5% 32.7% 2.0% 6.0% 31.9% 35.7 25.5 -10.2
WC-Tasman-
24.4% 34.4% 7.8% 5.6% 27.8% 26.8 16.7 -10.2
Marlborough
Canterbury 34.4% 33.8% 2.6% 5.5% 23.8% 39.0 31.8 -7.2
Otago-Southland 32.6% 36.0% 2.2% 4.3% 24.8% 46.1 30.4 -15.6
36Farm Confidence Survey researchfirst.co.nz Greatest Concerns 9 37
Farm Confidence Survey researchfirst.co.nz
9.1 Overall
Figure 9.1 shows how the main concerns for farmers have changed since the
January 2020 survey.
In July 2020, the single greatest concern for farmers was the economic situation
with 15.6% identifying this concern (up from 1.9% in January 2020). This is the
largest increase in the percentage of farms choosing this concern since January
2012. As mentioned previously, the disruption caused by the impact of Covid-19
on the world economy and fears of recession, trade wars and protectionism
is likely to be a large factor that is weighing on farmers sentiments. Farmer’s
investment intentions are also likely to be affected, as demonstrated by
decreased spending predictions over the next 12 months.
Regulation and compliance costs were the second greatest concern, with
just over 15% of respondents identifying with this concern. This is a perennial
concern for farmers and reflects both the former and current government
proposing tougher policies, especially in the environmental space which will
likely affect on-farm production and on their costs of doing business. Workplace
health & safety, employment, and immigration are other compliance cost areas
of concern.
The third concern was about farmgate and commodity prices, which has seen a
marked increase from 3% six months ago to 11% in July 2020. This may reflect
the uncertainty of commodity prices going forward but is still vastly different
from 2016 when it was the biggest concern for 48% of farmers.
Climate change policy & ETS (10% of all farms) was the fourth greatest concern,
although this concern had trended downwards over the past year. The concern
about climate change policy & ETS reflects the Government’s more ambitious
approach to combatting climate change and what this might mean for farming.
In particular, the Zero Carbon Bill, passed in late 2019, had tough emissions
reduction targets and although the Government has decided to work with the
primary industry on combatting agricultural emissions, the prospect of these
emissions being included in the ETS still is real. These policies will likely impact
on-farm production and on their costs of doing business and there are also fears
of them driving widespread land-use change, especially from sheep and beef to
forestry, and what that will mean for farming and rural communities.
The political situation was the fifth biggest concern, and this has remained
steady since the Labour Government came to power. The increase of concern
over the past six months is likely to reflect the upcoming general election.
The freshwater policy was a new concern in the January 2020 survey and was
identified as the sixth greatest concern, particularly by farms in the Canterbury
region. Many rural groups, including Federated Farmers, are worried about the
impact the Government’s proposed standards to protect waterways will make
pastoral farming uneconomic in some areas.
Debt, interest and banks have decreased to seventh place (just over 4% of
respondents). Interest rates are currently low, but ongoing farmer concern
likely reflects a tightening in lending conditions by banks and concerns about
further tightening and higher interest rates from the Reserve Bank’s bank capital
decisions (which have been delayed due to Covid-19).
38Farm Confidence Survey researchfirst.co.nz
Two other new concerns were added to the January survey, namely concerns
about blanket forestry conversion and firearms restrictions.
Blanket forestry conversion was identified as the eighth largest concern,
principally by farms in the East Coast North Island (13%), and sheep & meat
farms (8%). Their concerns are based around the social-economic impacts of
large-scale affectation on rural communities that could see a net loss of local
jobs and less money spent in the local economy when compared to blanket
forestry (excluding the harvest year). Arable farms and farmers in Canterbury
had the least concern about this issue.
The level of concern about pests, diseases and biosecurity that was clear in July
2018 at the height of Mycoplasma bovis has decreased substantially (down to
0.5%). The Government and industry’s commitment and action to eradicate
Mycoplasma bovis have eased some of the uncertainty for dairy and beef cattle
farmers. Nationally, the number of active properties has fallen to 6 as at 17 July
2020, with 244 properties having been cleared.
39Farm Confidence Survey researchfirst.co.nz
In this survey very few farms (0.1%) identified firearms restrictions as a top
concern, reflecting bigger concerns around the economy, regulation, and
farmgate prices.
Figure 9.1 Top twelve greatest concerns for farmers: all farms (January 2020 vs July
2020)
Economic Situation
Regulation & Compliance Costs
Farmgate & Commodity Prices
Climate Change Policy & ETS
Political Situation
Freshwater Policy
Debt, Interest, Banks
Blanket Forestry Conversion
July 2020 Other:
Feeding & Grazing (2.1%)
Viability & Profitability Public Perceptions (1.7%)
Input Costs (1.4%)
Industry Specific Issues (1.2%)
Local Govt & Rates (0.8%)
Environment
Pests, Disease & Biosecurity (0.5%)
Exchange Rate (0.5%)
Firearms Restrictions (0.1%)
Staffing
Weather January 2020 Other:
Feeding & Grazing (0.9%)
Public Perceptions (6.0%)
Don't know/nothing Input Costs (1.4%)
Industry Specific Issues (0.7%)
Local Govt & Rates (1.3%)
Pests, Disease & Biosecurity (0.8%)
Other
Firearms Restrictions (0.1%)
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Jul-20 Jan-20
40Farm Confidence Survey researchfirst.co.nz
Table 9.1 shows how the top 12 issues of concern have tracked over the past
three surveys.
Table 9.1 Top twelve greatest concerns over the 3 most recent surveys (July 2019 to
July 2020)
Jul-19 Jan-20 Jul-20
Climate Change Policy & ETS 23.6% Regulation & Compliance Costs 20.2% Economic Situation 15.6%
Regulation & Compliance Costs 19.4% Climate Change Policy & ETS 17.2% Regulation & Compliance Costs 15.3%
Debt, Interest, Banks 9.6% Freshwater Policy 10.7% Farmgate & Commodity Prices 11.1%
Political Situation 6.1% Debt, Interest, Banks 8.2% Climate Change Policy & ETS 10.2%
Public Perceptions 6.0% Public Perceptions 6.0% Political Situation 7.2%
Farmgate & Commodity Prices 5.8% Political Situation 5.8% Freshwater Policy 7.1%
Economic Situation 4.4% Environment 4.4% Debt, Interest, Banks 4.4%
Staffing 4.3% Staffing 4.2% Blanket Forestry Conversion 4.0%
Viability & Profitability 4.1% Weather 3.5% Viability & Profitability 3.9%
Environment 3.5% Viability & Profitability 3.1% Environment 3.7%
Input Costs 2.6% Farmgate & Commodity Prices 2.9% Staffing 3.0%
Pests, Disease & Biosecurity 1.7% Blanket Forestry Conversion 2.9% Weather 2.1%
41Farm Confidence Survey researchfirst.co.nz Highest Government Priorities 10 42
Farm Confidence Survey researchfirst.co.nz
10.1 Overall
Figure 10.1 shows how farmer perceptions of the main priorities for Government
have changed since the January 2020 survey.
Like earlier surveys since January 2017, the most important Government priority
identified in this survey is economy & business environment (37%), and this
has increased significantly by 14 points, up from 23% in January 2020. Indirect
effects of the Covid-19 pandemic on agricultural systems have seen a massive
decrease in demand for restaurant and commercial foods. These disruptions are
intensified by the pressure put on global supply chains and delays in ports and
the wider global network, although these will be minimised as the flow of freight
improves as restrictions begin to be lifted and business activity picks up.
Fiscal policy was the second priority, up by 6.4 points to 12.1%. The big operating
surplus that was delivered in the 2019/20 year will be negated by the pandemic
response, which is forecast to result in massive operating deficits over the
next three years and an explosion in Crown debt. The quantum and quality of
government spending is a perennial concern for many farmers.
Supporting agriculture and exporters has become the third main priority
identified by respondents, remaining stable at 10%. There was a decrease
in regulation and compliance costs – it decreased by 5 points to 9% and has
fallen to fourth place. The Government’s more activist and interventionist bent
are likely to impose more regulation and compliance costs rather than less,
especially in the environment and employment areas, but this priority has been
overshadowed by the economy and business environment.
Biosecurity continues to become less of a significant priority (down a further 3
points on six months ago), mainly to Meat & Wool and Other farms, and farms in
Auckland-Northland and Otago-Southland.
Water storage has moved to sixth place and is more of a government priority
to Arable farms and farms in the drought-affected East Coast North Island and
Canterbury, another traditionally dry region.
Climate change policy and ETS was down 1.5 points to 2%, although this is
relatively low compared to the sizable increase in farmer concern about the
issue. Most farmers would prefer the Government to focus on the economy and
would prefer climate change policy to not put the economy at risk.
The freshwater policy was a new priority added to the January 2020 survey,
although only 1% thought it should be the Government’s top priority. Of all the
regions, East-Coast North Island farms were more likely to name freshwater
as a higher priority, although only 2.6%. Again, most farmers would prefer the
Government to focus on the economy and would prefer water policy to not put
the economy at risk.
43Farm Confidence Survey researchfirst.co.nz
Other key priorities were mainly stable or up slightly up or down January 2020.
Figure 10.1 Top twelve perceived highest Government priorities for all farms
(January 2020 vs July 2020)
Economy & Business Environment
Fiscal Policy
Supporting Ag & Exporters
Regulation & Compliance Costs
Biosecurity
July 2020 Other:
Water Storage
Monetary Policy (1.2%)
Research & Science (1.0%)
Freshwater Policy (1.0%)
Rural & Regions
Trade Policy (1.0%)
Restrict Overseas Investment (1.0%)
Reduce Immigration (0.9%)
Employment & Skills Disaster Recovery (0.8%)
Transport, Communication, Energy (0.6%)
Social Issues
January 2020 Other:
Monetary Policy (1.3%)
Climate Change Policy & ETS
Research & Science (3.0%)
Freshwater Policy (1.3%)
Trade Policy (0.6%)
Environment
Restrict Overseas Investment (1.4%)
Reduce Immigration (1.7%)
Disaster Recovery (0.8%)
Tax Reform Transport, Communication, Energy (3.1%)
Housing (1%)
Industry Specific Issues (1%)
Other Local Govt Reform (1%)
Nothing/Don't know
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Jul-20 Jan-20
44Farm Confidence Survey researchfirst.co.nz
Table 10.1 shows how the top 12 priorities for the government have tracked over
the past three surveys
Table 10.1 Top twelve perceived highest Government priorities for all farms over the 3
most recent surveys (July 2019 to July 2020)
Jul-19 Jan-20 Jul-20
Economy & Business Environment 28.0% Economy & Business Environment 23.4% Economy & Business Environment 36.8%
Regulation & Compliance Costs 10.6% Regulation & Compliance Costs 14.2% Fiscal Policy 12.1%
Biosecurity 9.3% Supporting Ag & Exporters 10.3% Supporting Ag & Exporters 10.3%
Fiscal Policy 8.6% Biosecurity 7.5% Regulation & Compliance Costs 8.8%
Supporting Ag & Exporters 7.4% Fiscal Policy 5.7% Biosecurity 4.4%
Climate Change Policy & ETS 4.1% Social Issues 4.4% Water Storage 3.3%
Employment & Skills 3.8% Climate Change Policy & ETS 3.6% Rural & Regions 2.8%
Rural & Regions 3.6% Transport, Communication, Energy 3.1% Employment & Skills 2.6%
Social Issues 3.3% Rural & Regions 3.1% Social Issues 2.3%
Research & Science 2.8% Employment & Skills 3.0% Climate Change Policy & ETS 2.0%
Environment 2.5% Research & Science 3.0% Environment 1.3%
Restrict Overseas Investment 2.2% Environment 2.9% Tax Reform 1.2%
45Farm Confidence Survey researchfirst.co.nz About this Survey 11 46
Farm Confidence Survey researchfirst.co.nz
11.1 Research Design
Federated Farmers have been conducting biannual Farm Confidence Surveys
since July 2009. These surveys aim to measure farmer confidence over
eight key issues faced in the farming profession and community. Members of
Federated Farmers are invited to complete these surveys, which run in January
and July each year.
The July 2020 survey was completed for Federated Farmers by Research First,
New Zealand’s leading agricultural market research company. The online survey
received 1,725 responses from farmers in four industry groups over 24 provinces
(condensed into 7 regions) across New Zealand (Table 11.1).
Table 11.1 Completed surveys by region compared to a recommended weighting
Number of
July 2020 Weighting %
Respondents
Auckland-Northland 131 7.6% 6.1%
Waikato-Bay of Plenty 427 24.8% 23.8%
East Coast NI 193 11.2% 11.0%
Taranaki-Manawatu 251 14.6% 15.3%
WC-Tasman-Marlborough 90 5.2% 5.5%
Canterbury 311 18.0% 19.0%
Otago-Southland 322 18.7% 19.4%
TOTAL 1,725 100% 100%
Similar to all Federated Farmers’ Farm Confidence Surveys, results must be
treated with some caution. Although the sample reported here is a large one, it
is a self-selected sample. Also, smaller numbers of Arable and ‘Other’ types of
farmers mean that results for these industry groups may vary more from survey
to survey than for Dairy and Meat & Wool farms.
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