All looking but no buying

National Field Day attendance are up by 9% - at least over the early days of Mystery Creek.  But in rubbing shoulders with other farmers it seemed to me that cheque books were firmly in the back pocket.

Farmers seemed to be catching up with service providers, seeking information but the stall holders I talked to hadn't had many firm commitments.  I felt particularly sorry for irrigation and pump suppliers - they didn't seem to be attracting any clientele at all.

The reason that the rural service sector is having a tough time is threefold - many farmers don't have discretionary spending power, farmers largely bought new gear two years ago and those farmers that can spend are quite enjoying keeping their hands in their pockets.

Although the outlook for the dairy sector is very positive, most of the money is still promised and not yet in the bank.  The increased payout received to date has largely gone on extra feed (addressing the Northern North Island drought) and reducing overdrafts.  And the average dairy farmer has about $20/kgMS of debt which is probably $5/kg too high.  It will take 3 - 5 years of good payouts and debt repayments to bring this back into line.

A good proportion of the agricultural economy is represented by the sheep industry - but on that front there isn't much cash about either.

And finally, at least to me, there seems to be a paradigm shift well under way.  This shift recognises that asset price booms are usually not sustainable, and that generating cash returns, reducing debt and increasing savings are all desirable outcomes. 

So whilst dairy is booming, don't expect very much of that to trickle down to the rest of the economy - at least for the next two or three years.