Confidence holds up down on farm | Rural

New Zealand farmer confidence has held up, backed by above-average commodity prices, the latest Rabobank farmer survey reveals.

The survey, which was completed early in December, found 33 per cent of the country's farmers expected the agricultural economy to improve in the next 12 months.

That was a small drop compared to 35 per cent in the previous survey.

On the downside, those expecting conditions to worsen increased slightly to 12 per cent, up from 10 per cent previously.

Farmers predicting conditions to remain stable totalled 53 per cent.

Rabobank general manager Ben Russell said overall the results of the survey showed farmers were more confident about expectations for their own farm business performance than that of the broader agricultural economy.

"This is primarily due to the uncertainty surrounding the global economic outlook," Mr Russell said. "New Zealand farmers are well aware they are not immune from the financial instability at play in the northern hemisphere.

"Cautious optimism among the farming sector stems from relatively high commodity prices against a backdrop of global financial market turmoil."

The survey found that confidence remained highest amongst sheep and beef farmers.

Farmers in this sector rated higher at 56 per cent than their dairy counterparts (50 per cent) in expecting the agricultural economy to improve.

"The ongoing optimism from sheep and beef farmers reflects the strong farmgate returns received lately with record high lamb prices and strong beef prices," Mr Russell said.

"We have also seen improved returns for wool with the outlook remaining bright on the back of constrained global supplies.

"Although dairy farmer confidence has weakened slightly, this is likely to be an expectation that record high prices are unlikely to persist into 2012, with the gradual softening of global dairy trade prices over recent months."