New Zealand farms are making more money than at any point in the past decade, but a new survey shows farmers are far from sure the good run will last, and arable growers have been left out of the recovery altogether.
The latest Federated Farmers Confidence Survey, released this week, found 72 per cent of the 634 farmers who responded in July are running at a profit, with fewer than one in 20 making a loss.
“That’s an incredibly positive result and the highest since we started asking about profitability back in 2016,” Federated Farmers president Colin Hurst says.
Hurst, a mixed arable and dairy farmer from the Waimate area who was elected national president in late June, says the turnaround from a few years ago has been sharp. “Dairy, sheep and beef farmers are now getting strong returns again, meaning farming has been one of the main bright spots in an otherwise sluggish New Zealand economy,” Hurst says.
The recovery is now two years old. According to the federation, current profitability has risen in every January and July survey since a trough in July 2024. At the depth of the 2022 to 2024 downturn, roughly one farm in three reported making a loss.
The mood about the year ahead is another matter. Nearly 30 per cent of farmers expect economic conditions to worsen over the next 12 months, against just 12 per cent who expect them to improve. That is a clear turn from the January survey, when optimists still narrowly outnumbered pessimists, by a net four points. Now the pessimists outnumber the optimists by more than two to one.
Dairy is where most of the worry sits. “Most of that concern about the year ahead is coming from dairy farmers, with 39% expecting a downturn versus 18% of meat and wool farmers,” Hurst says.
Dairy farmers are doing well right now. Seventy-seven per cent report making a profit, giving the sector a net current profitability score of plus 74.5. Yet 40 per cent expect their own profitability to decline over the coming year, compared with 14 per cent of meat and wool farmers. That is slightly less gloomy than in January, when 46 per cent of dairy farmers expected their after-tax profit to worsen.
Asked to name their biggest concerns, farmers put rising input costs and on-farm inflation first (33 per cent), followed by the election and domestic politics (30 per cent), and regulation, compliance and red tape (23 per cent). Commodity prices and weather, including a possible El Niño drought, were well down the list at 12 and 11 per cent.
“But even though returns are good, they’re feeling squeezed by high costs, over-regulated, and politically anxious,” Hurst says.
He says a recurring theme in farmers’ written comments is that fuel, fertiliser, freight, insurance and other costs are climbing faster than returns. “They have limited ability to pass those costs on, so that means profit margins could be eroded,” Hurst says.
Fuel is one of those pressures. RNZ reported last week that global oil had hit US$108 a barrel.
Even so, farmers are putting money back into their businesses. More than half of respondents plan to increase on-farm spending and many expect to lift production. Two in five farms expect to reduce debt, against one in nine that expect to borrow more.
“Set against rising profitability, it appears our sector is investing and repairing balance sheets while the cash flow is there,” Hurst says.
The exception is arable farming, the growers of grain, seed and other crops. They are the only group expecting to take on more debt rather than pay it down, and the only group with a negative score for current profitability, at a net minus 2.6.
The slide since the start of the year has been steep. In January, 41 per cent of arable farmers said they were making a profit and 16 per cent said they were making a loss, according to that survey’s report. Six months later, the federation puts it at one in five in profit and nearly one in four losing money. On those figures, the share of arable farms in profit has roughly halved in six months.
“It’s incredibly concerning that only one in five arable farmers report making a profit, and nearly one in four report a loss,” Hurst says.
He says the conditions lifting the pastoral sector are not reaching cropping farmers, and points out that arable growers supply the seed, grain and feed the livestock industry depends on.
The arable figures come with a caution. The survey is completed by Federated Farmers members who choose to take part, and the federation’s January report notes that the smaller number of arable respondents means their results can vary more from one survey to the next than dairy or sheep and beef results. Only 32 arable farmers took part in January, out of 639 responses.
The survey also asked whether economic conditions, weather, government policy or other pressures were affecting farmers’ mental health and wellbeing. Just under a third said yes, with a further 8 per cent unsure. That is much the same as in January, when 30 per cent said their wellbeing was affected.
With the general election approaching, Hurst has a message for political parties. Nearly a third of farmers say cutting regulation and compliance costs should be the Government’s top priority. Hurst credits the current Government with doing “a good job of slashing red tape” but says the job is not finished.
“What we need is for the Resource Management Act reform to be completed, alongside simplifying consents and audits, and reducing council powers,” Hurst says.
The federation says its election platform sets out a five-point plan to double farm productivity, cut costs and improve the environment, and it is urging all parties to take it on board.
For now, the picture is of a sector that is well paid at the farm gate but bracing for a harder year, with cropping farmers already there.
Are you farming, or working alongside farmers? Is the profit recovery reaching your part of the sector, and what worries you most about the year ahead? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply