Input Prices Rise for Sheep And Beef Farmers

Input Prices Rise for Sheep And Beef Farmers

Prices for inputs used on New Zealand sheep and beef farms increased 1.1 per cent in the year to March 2015, according to the latest Beef + Lamb New Zealand (B+LNZ) Economic Service sheep and beef on-farm inflation report.

The sheep and beef on-farm inflation report identifies annual changes in farm input prices in New Zealand for the various expenditure categories. The on-farm inflation rate is determined by weighting the individual input category price changes by their proportion of total farm expenditure.

B+LNZ Economic Service chief economist Andrew Burtt says the increase in the 2014-15 year follows a 0.6 per cent decrease the previous year and was driven by rises in prices of interest and, local and central government rates and fees. It was only partly offset by a fall in fuel prices as fuel accounts for less than 5 per cent of sheep and beef total farm expenditure.

“Of the 16 input categories, prices for 12 increased and four decreased. The size and weighting of the increases more than offset the decreases.”

The largest price increases during the 12 months to March 2015 were for interest, and local and central government rates and fees – up 9.4 and 4.9 per cent, respectively. Prices decreased by 21.7 per cent for fuel and by 2.3 per cent for fertiliser, lime and seeds.

On-farm inflation was +32.3 per cent over the past 10 years, compared to +25.2 per cent for consumer price inflation over the same period. It reflects that over the past 10 years sheep and beef farm input prices increased faster than the prices of consumer items New Zealand households buy.

“Excluding interest, the underlying rate of on-farm inflation was -0.3 per cent – compared with +1.1 per cent when including interest – in the year to March 2015. It highlights the importance of interest expenditure in total farm expenditure. After fertiliser, lime and seeds, interest is the second largest area of expenditure on sheep and beef farms, accounting for 14 per cent of total farm expenditure.

The full report is available on the B+LNZ website beeflambnz.com/economic-reports

ENDS

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