Economic confidence lifts in Southland

Wednesday, 29 September 2021

Westpac senior agri economist Nathan Penny says economic confidence has lifted in Southland.

Economic confidence has lifted in Southland on the back of the agriculture sector “firing on all cylinders”, a Westpac economist says.

However, a farming leader says the strong milk and meat prices at the farm gate are being offset by rising costs for the likes of fertiliser, machinery and fuel.

Westpac senior agri economist Nathan Penny said Southland was one of just four regions to see economic confidence improve in the September quarter, with all four regions having agricultural sectors benefiting from “very strong” export prices and incomes.

“Regions like Canterbury, Gisborne/Hawkes Bay and Southland are among the most confident across the country,” Penny said.

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Southland Federated Farmers president Chris Dillon.

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The bank’s survey showed 33 per cent of Southland respondents expected the economy to improve over the coming year, while 18 per cent were pessimistic and the remainder were indifferent or had no opinion.

“Importantly for the region the agriculture sector is firing on all cylinders with the farm-gate milk price at very healthy levels and farm-gate meat prices at record highs.”

Looking ahead, Penny expected agriculture’s “good fortunes” to continue and therefore Southland should remain in a good patch.

Southland Federated Farmers president Chris Dillon suggested the optimism of the respondents may be eroding as costs for farmers had “gone through the roof”.

“The farm gate prices are fine but the costs of doing anything are getting dearer by the day.”

Southland Chamber of Commerce chief executive officer Sheree Carey.

The extra costs meant there would not be much of a difference to the farmers bottom line, he said.

And there was uncertainty about getting produce into and out of the country; uncertainty about regulations facing farmers, staffing shortages, and some supplies were not arriving from Auckland which was in alert level 3.

Southland Chamber of Commerce chief executive Sheree Carey said she was not surprised by the survey results showing economic confidence in the region.

“Just because of the way we bounced back from lockdowns last time … and the fact we have the primary sector cushioning the blow for Southland.”

She stopped short of saying she was seeing high confidence, but suggested Southland was “not as pessimistic” as other regions.

The primary sector was still producing, people were still employed and the region still had low unemployment, Carey said.

“We are not having mass business closures or layoffs that maybe some other regions are seeing and we aren’t relying on tourism as much as other regions, apart from Fiordland.

“Wider Southland is doing pretty well, by all accounts.”

Penny said the Westpac survey found overall economic confidence nationwide had dipped in the September quarter as the country re-entered lockdown.

“Unsurprisingly, given the extended lockdown, Aucklanders are the most pessimistic in the country.”

Confidence had also dipped in Otago, with the lockdown hitting the region’s key tourist hotspots once again.