25 Jul 2012

Farmer confidence sags

6:32 am on 25 July 2012

Good growing conditions and some record production levels have not been enough to keep farmers upbeat about the year ahead.

The latest Federated Farmers confidence survey shows a reversal of the high level of optimism that was apparent in the last survey six months ago.

Most of the farmers questioned are expecting their profitability to worsen over the coming year.

Dairy farmers, facing a 12% drop in Fonterra's opening milk price forcast, are the most pessimistic.

But confidence levels are also well down for sheep and beef farmers, with reductions of up to 10% for sheep meat and wool prices forecast.

Rob Davison of the Beef + Lamb New Zealand economic service says with those trends, the drop in farmer confidence should come as no surprise.

But increased production, including record lamb slaughter weights expected this year, will go some way to off-setting the fall in prices, he predicts.