Latest / Best of Business / Jamie Mackay: The Country host on what the latest Federated Farmers Confidence survey means for the sector

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Jamie Mackay: The Country host on what the latest Federated Farmers Confidence survey means for the sector · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio. The
• 0:18
  Speaker 1: Rural Report on Heather Duplessy-Allen Drive.
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  Speaker 2: Jamie McHuntry hosts... Jamie Mackay hosts of The Country is
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  Speaker 2: with us. Hello, Jamie.
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  Speaker 3: It's actually not bad. Got it a second time, Heather.
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  Speaker 3: Good afternoon. Good evening.
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  Speaker 2: Jamie McHuntry.
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  Speaker 1: I don't know.
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  Speaker 2: You could probably do something with that. You're very good
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  Speaker 2: with the branding, commercialising and the marketing. Now, listen, why
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  Speaker 2: are you worried that the good times for the farmers
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  Speaker 2: aren't going to last?
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  Speaker 3: Well, it's not so much me worried. It's federated farmers
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  Speaker 3: have done their... What do they do? Two a year,
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  Speaker 3: I think, or is it one every two years? It's
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  Speaker 3: either biennial or biennial. Anyhow, I won't get bogged down
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  Speaker 3: on details. So the latest confidence farmer survey says 72%
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  Speaker 3: of farmers are making a profit, fewer than 1 in
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  Speaker 3: 20 making a loss. This is the highest that it's
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  Speaker 3: been since they started asking about it. profitability way back
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  Speaker 3: in the 2016 survey. But all that glitters is not gold. Now,
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  Speaker 3: confidence for the next 12 months has moved sharply in
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  Speaker 3: the opposite direction. Nearly 30% of farmers expect conditions to
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  Speaker 3: worsen compared to only 12% expecting improvement. Now, And surprisingly,
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  Speaker 3: in a lot of ways, the most concerned group are
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  Speaker 3: the dairy farmers. I need to put this into some
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  Speaker 3: perspective as well. This survey was done in July. So
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  Speaker 3: since then, we've had four positive GDT auctions. So I
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  Speaker 3: think the dairy farmers might be a bit more optimistic.
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  Speaker 3: But right across the board, unless you count the ones
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  Speaker 3: that are going no good at all, like arable and viticulture,
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  Speaker 3: right across the board, returns are good. But farmers are
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  Speaker 3: feeling squeezed by high costs. They're worried about being over-regulated,
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  Speaker 3: although the government's done a reasonable job there in trying
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  Speaker 3: to cut red tape. And obviously, ahead of an election,
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  Speaker 3: they're reasonably politically anxious. What's worrying farmers, Heather? Rising input
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  Speaker 3: costs on farm inflation. That's the big worry, followed by
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  Speaker 3: election and domestic politics. followed by red tape and compliance. Interestingly,
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  Speaker 3: things like commodity prices and the weather, we've got a
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  Speaker 3: super El Nino on the way, are well back in
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  Speaker 3: the terms of what's worrying farmers. The real worry, sorry,
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  Speaker 3: I'll throw in one more for you. The arable sector
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  Speaker 3: is the real worry. They're the only lot that's going
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  Speaker 3: to increase debt rather than pay it down. Only one
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  Speaker 3: in five arable farmers, Heather, are going to make a
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  Speaker 3: profit this year, and a lot of that is off
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  Speaker 3: the back of the price of fertiliser and fuel. They're
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  Speaker 3: being hit particularly hard there.
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  Speaker 2: Okay, and what are we expecting from the auction this evening?
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  Speaker 3: Yeah, well, it'll be an interesting one. As I said,
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  Speaker 3: four positives in a row since a big fall, relatively
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  Speaker 3: big fall in early July. My guy, Mike McIntyre at
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  Speaker 3: Jarden says flat, maybe a slight drop in butter. But
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  Speaker 3: we did get that report out from Rabobank saying that
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  Speaker 3: global supply is starting to tighten. There's a lot of uncertainty, obviously,
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  Speaker 3: the cost of production increasing. has gone way up. Rabobank
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  Speaker 3: expects milk production across the big seven exporting regions. That's
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  Speaker 3: the US, Argentina, Brazil, Uruguay, the EU, us and the
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  Speaker 3: Aussies to slow to half a percent year on year
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  Speaker 3: in the second half of 2026. And it's going to
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  Speaker 3: contract down to 0.2 in Q4, remaining flat through the
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  Speaker 3: first half of 2027. What does all this mean for
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  Speaker 3: the dairy farmers? Well, at the moment, Fonterra is sitting
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  Speaker 3: at $ 9. 25. The cost of production is creeping up right
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  Speaker 3: up to about $ 9. So that doesn't work out that well.
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  Speaker 3: But the good news is the futures market has this
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  Speaker 3: season at $ 9. 90, next season at $ 9.
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  Speaker 1: 81.
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  Speaker 3: So those are reasonably positive numbers. But as the Middle
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  Speaker 3: Eastern situation gets worse, fuel, fertiliser, feed, everything has a
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  Speaker 3: freight content in it when it comes to farms. So
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  Speaker 3: that is the problem area, the cost side of the ledger.
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  Speaker 1: Fair enough.
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  Speaker 2: Jamie, thank you as always. It's good to talk to you.
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  Speaker 2: We'll have a chat again in a couple of days.
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  Speaker 2: It's Jamie Mackay, host of The Country.
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  Speaker 1: For more from Newstalk ZB, listen live, on air or
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