In July last year a net 45.4% of dairy farmers were expecting profitability to worsen; in mid January this was down to 8.3%.
The latest report says the July survey was done when dairy commodity prices were at a low point. Since mid-July Fonterra’s GlobalDairyTrade auction has increased by 27% and Fonterra has revised up its payout forecasts.
“These upward revisions have driven big improvements in dairy farmer views on their own profitability and on the wider economy, albeit off very negatives bases,” the 2012-13 mid-season farm confidence survey says. “More dairy farmers also expect to increase production and spending; and there is only a small drop in those expecting to reduce debt.”
Dairy farmers are by far the most optimistic of farmer groups surveyed by Federated Farmers about the general economy, with a net 3% expecting economic conditions to improve. This is up 37.5% on July and dairy farmers are also the only group to be more optimistic than this time last year, the report says.
A net 35.2% of dairy farmers expect to produce more, the highest of any of Federated Farmers’ industry groups. This is largely unchanged on last July, when a net 34.8% expected to increase production, but is down 19.5 points on this time last year.
A net 12.4% of dairy farmers expect to increase their spending over the coming year, a major turnaround on last July’s survey when a net 10.1% expected to reduce their spending. This is still down on this time last year when a net 28.8% expected to increase spending.
A net 21.7% of dairy farmers expect to reduce their debt. This is down 3.3 points from last July when a net 25% expected to reduce debt. It is also down 25.2 points on this time last year.
The tightening in the farm labour market since last July has been particularly felt by dairy farmers. A net 24.6% of dairy farmers reported that it was harder to find skilled and motivated staff. This is up 12.2 points from last July and up 12.1 points on this time last year when a net 12.5% reported it having been harder.
The issues of most concern to dairy farmers are: regulation and compliance costs, 22.8%; exchange rate, 17.4%; and farmgate and commodity prices, 12%.
