-
Stock agents and farmers chat - Source: NZPA / Rob Tucker -
Watch Video
-
Related
Farmers' wallets should be bulging right now with soaring prices for their products and excellent growing conditions.
The annual Fieldays expo at Mystery Creek, Hamilton will offer plenty of temptation when it opens today with hundreds of shiny tractors and new farm toys on display, especially with low interest rates also on offer.
But Federated Farmers' local Waikato President, James Houghton, told TVNZ today he thinks farmers will still be "moderate" in their enthusiasm to place orders.
"Farmers will be bringing their cheque books today but I think there will be a moderate level of spending from the indications I've been given here (at Fieldays).
"I don't think it will be excessive," he said.
Houghton says farmers are feeling very optimistic right now but the high debt level, especially on dairy farms, is still a concern.
The Reserve Bank has recently signalled it will require banks to hold more funds in reserve against their rural loan books.
"It will become a lot more expensive to borrow. Banks - through the whole economic crisis - always maintain their profits and if there are extra costs, they will just pass them on to farmers," Houghton told AMP Business.
Waikato University agricultural economist Stuart Locke told Newstalk ZB he thinks farmers' cheque books will be dusted off and spending will be up by at least 10% on last year.
MAF report welcomed
Farmers' optimism looks justified according to MAF's Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report which yesterday forecast gross agricultural revenue to grow by 45% by 2016, or from $22 billion to $32 billion.
"It paints an incredibly bright picture for the medium term," says Philip York, Federated Farmers economics spokesperson.
"This must be a major cause for celebration for all New Zealanders because these export dollars directly pay for health, education and social services. Half of this revenue is also consumed in the provincial economy.
York says if the number of agricultural employees remains stable, then by 2016 each one could be generating $407,000 in gross revenue per person.
"That's well up from $279,000 in 2010 and highlights the significant value inherent in agriculture.
"By way of comparison in 2010, tourism generated value of $80,000 per employee," he said.
But he does note that MAF's predictions use Treasury's forecasts on the dollar coming off its historic high.
The report also does not factor in biosecurity risks, climate factors or commodity price volatility which could all affect farmers' returns.
"These are very real to farmers and a farm's risk management profile. As is the risk of some green-eyed tall poppy syndrome, kneecapping New Zealand's unique competitive advantage," York said.
