Waning sentiment among sheep and beef farmers has pushed rural confidence deeper into negative territory in Rabobank's latest rural confidence survey.
The survey, completed earlier this month, found net farmer confidence has slipped to -32 percent, down from -26 percent previously. In the last quarterly survey there had been a strong recovery from historic lows recorded early in the year.
Rabobank said the chief contributor to the lower net reading was markedly-lower sheep and beef farmer sentiment. That negated higher confidence levels reported among dairy farmers and horticulturalists, who were bouyed by improving demand for products.
Rabobank New Zealand chief executive, Todd Charteris, said sheep and beef farmers reported lingering concerns over government policy and the on-going impacts of Covid-19.
"More than half of all sheep and beef farmers with a pessimistic outlook cited government policy as a key reason for concern, with many likely to be worried about the potential for freshwater regulations announced in late May to negatively impact their operations," Charteris said.
"Given the continued impact of Covid-19 on the global food service sector - and the importance of this sales channel for red meat products - it's not surprising to see the virus also cited as a key source for concern," he said.
The survey found dairy farmers and horticulturalists more upbeat about the fortunes of the agricultural economy. Dairy farmer net confidence rose to -29 percent, up from -33 percent previously. Net confidence among horticulturalists was up to -3 percent from -20 percent.
Improving demand was the key reason for optimism among both dairy farmers and growers - cited by 45 percent of dairy farmers and 92 percent of horticulturalists who had a positive outlook on the year ahead.
Farmers' investment intentions remain relatively unchanged from the previous survey. A total of 16 percent were expecting to increase farm investment in the coming 12 months.
The Rabobank Rural Confidence Survey is administered by independent research agency TNS, interviewing a panel of approximately 450 farmers each quarter.