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Input Prices Up for Sheep and Beef Farmers

26 May 2006

Input Prices Up for Sheep and Beef Farmers

Prices paid for a trailer-load of goods and services used to operate sheep and beef farms increased 4.9 per cent between February 2005 and February 2006 according to Meat & Wool New Zealand Economic Service. This is slightly above the previous year’s 4.1 per cent increase but appreciably higher than for the previous 12 months which decreased 0.2 per cent.

Executive Director of Meat & Wool New Zealand’s Economic Service Rob Davison says there were no decreases in any of the 16 categories of on-farm expenditure. This is similar to last year’s trend where there were increases across all categories.

Prices increased by 24.4 per cent for fuel; 10.2 per cent for shearing expenses; 6 per cent for fertiliser, lime and seeds; 4.7 per cent for animal health; 4.6 per cent for repairs, maintenance and vehicles; And 2.5 per cent for Interest. The increase in fertiliser prices reflected high international demand for base material and shipping services. Higher fuel prices were reflected in the 7.5 per cent increase in cartage rates.

This is the fifth successive year that local body rates have increased at a higher rate than on-farm inflation (+6.2 per cent). The five-year increase for local body rates was 23.3 per cent compared to 14 per cent overall on-farm inflation for the same period.

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

Excluding interest the underlying rate of on-farm inflation was 5.2 per cent and was up from 3.7 per cent for the previous 12 months. The overall 4.9 per cent increase for sheep and beef farm input prices was the highest rate of increase since 2000-01.


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