Pressure on sheep and beef sector

Media Release

5 June 2009

Higher input prices continue to put pressure on sheep and beef sector

New Zealand sheep and beef on-farm inflation was 7.6 per cent in the year to March 2009, according to Meat & Wool New Zealand’s Economic Service.

Economic Service Executive Director, Rob Davison says this is the second largest increase since 1986-87. Excluding interest, which decreased in price, the underlying rate of on-farm inflation was 10.7 per cent, 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 per cent in the year to March 2009, with rises in fertiliser prices accounting for almost all of the increase.

“The good news is fertiliser prices have decreased 11 per cent since March,” says Mr Davison.

“The price for a tonne of superphosphate has decreased 8.6 per cent since March and DAP fertiliser has decreased 18.5 per cent.”

“Shearing expenses were up 14.7 per cent, due to a shift away from second shearing to full-fleece shearing, which is higher priced with more labour. According to the Shearing Contractors Association, the general shearing rate would be up 3 to 4 per cent.”

Prices paid for repairs and maintenance increased by 8.9 per cent, closely followed by an 8.7 per cent increase for insurance and an 8.3 per cent increase for rent.

After showing increases last year, the cost of both fuel and interest on farm debt decreased in the year to March 2009.

“Fuel prices decreased 14.2 per cent, predominantly because of the fall in global oil prices. The price of interest on farm debt decreased 6.7 per cent, reflecting overall lower interest rates indicated by the Reserve Bank official cash rate falling from 8.25 to 3.00 per cent in the year to March 2009.”

In the last five years, local government rates and charges increased by 33.8 per cent, an average per year rate of increase of 6.8 per cent. However, rates increased 5.6 per cent in the year to March 2009, which is the lowest rate of increase since 2004-05.

The full Movements in Sheep and Beef Farm Input Prices 2008-2009 report is available on the Meat & Wool New Zealand website www.meatandwoolnz.com.

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