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Cost Up for Sheep, Beef Farmers despite dollar

Media Release

DATE: _28 May 2007

Input Prices Up for Sheep and Beef Farmers despite high exchange rate

Prices paid for a trailer-load of goods and services, used to operate sheep and beef farms, increased 1.9 per cent between February 2006 and February 2007, according to the Meat & Wool New Zealand Economic Service. This compares with a 4.8 per cent increase in the previous 12 months.

Executive Director of Meat & Wool New Zealand’s Economic Service, Rob Davison says of the 16 categories in the index there was a large decrease in animal health (-11.2%) and insurance (-3.2%). The most significant increases were for rates (+7.1%) and cartage (+5.6%).

This is the sixth successive year that local body rates have increased at a higher rate than on-farm inflation (+7.1 %). The six-year accumulated increase for local body rates was 30 per cent compared to 16 per cent overall on-farm inflation for the same period. A lagged effect from of higher fuel prices, wages increases and holiday pay were reflected in the increased cartage rates (+5.6%).

The decrease in overall Animal Health prices (-11.2%) is sourced from Statistics New Zealand and is the largest decrease since records began in 1984-85. If Animal Health prices had remained unchanged then on-farm inflation rate would have been 2.6 per cent.

Other major categories showed increases of 3.2 per cent for shearing; 3.1 for interest; 2.5 per cent for fertiliser; 2.2 per cent for wages and 2.1 per cent for repairs, maintenance and vehicles.

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The increase in interest rates reflects overdraft, floating and fixed term mortgage interest rates rises for sheep and beef farm businesses.

Excluding interest, the underlying rate of on-farm inflation was 1.7 per cent and was down from the 5.2 per cent for the previous 12 months. The overall 1.9 per cent increase for sheep and beef farm input prices was the lowest rate of increase since 2003-04.


ENDS

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