Higher input prices hammer sheep and beef sector
June 15th, 2009
Sheep and beef on-farm inflation hit 7.6 % in the year to March 2009. Meat & Wool NZ’s Economic Service, Executive Director, Rob Davison says this is the second largest increase since 1986-87. Excluding interest costs, which decreased the underlying rate of on-farm inflation was 10.7% , the highest since 1985-86.
Fertiliser, shearing expenses, and repairs and maintenance experienced the biggest price increases. Fertiliser, lime and seeds, as a combined category, were up 33.8% in the year to March 2009, with rises in fertiliser prices accounting for almost all of the increase. But since March fertiliser prices have decreased 11%. The price for a tonne of superphosphate has decreased 8.6% since March and DAP fertiliser has decreased 18.5%.
Shearing expenses were up 14.7%, due to a shift away from second shearing to full-fleece shearing, which is higher priced with more labour. Prices paid for repairs and maintenance increased 8.9%, closely followed by an 8.7% increase for insurance and an 8.3% increase for rent. The cost of both fuel and interest on farm debt decreased in the year to March 2009.
Fuel prices decreased 14.2%. The cost of interest on farm debt decreased 6.7%, reflecting overall lower interest rates indicated by the Reserve Bank Official Cash Rate falling from 8.25 to 3.00% in the year to March 2009. In the last five years, local Govt rates and charges increased 33.8%, an average per year rate of increase of 6.8%. However, rates increased 5.6% in the year to March 2009, which is the lowest annual increase since 2004-05.
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