5 December 2003
NZ Dollar Bites Beef And Sheep Farmers
Sheep and beef farmers need urgent relief from the impact of a soaring New Zealand dollar, not more taxes and higher
input costs, said Ian Corney, Chairman of the New Zealand Meat and Fibre Producers' (NZMFP) Council.
"Beef prices are at 10-year highs in the United States, but the kiwi's flight has denied New Zealand farmers most of
that price advantage," Mr Corney said. "Wool prices are also under pressure from the New Zealand dollar at near six-year
highs against the greenback.
NZMFP is an industry group of Federated Farmers of New Zealand (Inc), the country's main rural organisation with more
than 18,000 members.
"Fertiliser prices have thankfully fallen this year but some other farm costs have remained high, in particular the
price of petrol and diesel. There is no justification for prices at the bowser remaining at current levels."
Mr Corney said the government could do more to keep inflation under control. Lower inflation will take pressure off the
Reserve Bank of New Zealand to next year consider raising interest rates, which in turn would put more upward pressure
on the New Zealand dollar.
"Local and central government could be a lot more vigorous in keeping down inflation through lowering the cost of
monopoly services," he said.
Councils are notorious for putting up rates far in excess of the inflation rate. A FFNZ survey of forecast rates
released late last month showed that this unwelcome trend will continue.
Another example of government taking a poor lead is the Building Bill currently before Parliament. This will add
significantly to the cost of building work in New Zealand through requiring most building to be supervised by licensed
practitioners, said Mr Corney. Housing-costs are a big influence on headline inflation.
"This week it was reported that the government is planning to whack a further five cents a litre on petrol taxes. In
addition to putting up farm costs, the new tax will add to inflation and put more pressure on interest rates and
therefore the currency," Mr Corney said.