Farmer confidence has lifted after three consecutive quarters of decline, but it still remains in negative territory.
Rabobank's first quarterly Rural Confidence Survey for the year - completed last month - has shown the nation's net farmer confidence has risen to -9 percent, up from -15 percent recorded in the final quarter of 2018.
The bank's general manager for country banking, Hayley Gourley said greater optimism among dairy farmers was the major driver of the improved overall confidence reading.
"In the last survey of 2018, we saw 34 percent of dairy farmers expecting conditions in the agricultural economy to worsen and only 13 percent expecting an improvement, however, since then we've seen a long run of consecutive jumps in the Global Dairy Trade price index," Ms Gourley said.
"This has resulted in a lift in dairy farmer confidence so that in this survey dairy farmers were now more evenly split on the direction of the agricultural economy with 23 percent expecting conditions to improve and 24 percent expecting them to worsen," she said.
But Ms Gourley said overall net rural confidence across all farming sectors still languished in negative territory - with farmer concerns about government policy persisting.
"Farmer concerns over signalled upcoming policy changes in relation to their future greenhouse gas obligations, and further freshwater reforms, the recent recommendations from the government's tax working group are also likely to be playing on farmers' minds," Ms Gourley said.
"In particular, farmers will be concerned by the group's recommendations that a capital gains tax be applied to farmland as well as new taxes introduced for fertiliser and water pollution."
The survey found farmers' investment intentions had dropped marginally on last quarter, but remained in net positive territory, with overall more farmers intending to increase than decrease investment in their farm businesses.
Conducted since 2003, the Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.