Net farmer confidence rose to +10 percent in the latest Rabobank Rural Confidence Survey, up from -23 percent in the previous survey last December.
The number of farmers expecting conditions in the agricultural economy to improve over the coming 12 months was also up, rising from 16 percent last quarter to 29 percent.
Meanwhile there were fewer farmers expecting economic conditions to worsen, at 19 percent compared to 39 percent previously.
Todd Charteris, chief executive of Rabobank New Zealand, said positivity among farmers was the highest it’s been since early 2018.
“Rising commodity prices were the key factor cited by farmers now holding an optimistic view of the year ahead with this no surprise given the strong upward movement in dairy commodity prices we’ve seen since our last survey.”
The survey was also conducted after Fonterra raised its midpoint forecast payout to $7.60 per kilogram of milk solids in March.
Charteris said while dairy prices were primarily responsible for the lift in confidence, there was also positive news for the sheep and beef sector.
“Commodity prices for red meat products haven’t fared as well as dairy prices. But demand from our key markets has held up much better than expected in the first quarter of the year, with Chinese demand in particular leading the charge as our major market continues its post-COVID-19 recovery.”
The survey also showed an increase in pastoral farmers who were significantly more confident about the prospects for their own farm performance in the coming year.
“Well over a third of dairy farmers are now expecting their own farm business performance to improve while the number of dairy farmers expecting performance to worsen fell to just eight percent,” Charteris said.
Not everyone in the agriculture sector was positive though.
Ongoing labour shortages plaguing the horticulture industry had led to more growers expecting their business’ performance to worsen than those expecting it to improve.