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Govt Actions Put Agricultural Upturn At Risk

The 2000/2001 season has got off to a flying start, but it will end with a crash landing if the Government doesn't come to grips with its responsibilities, National's Agriculture Spokesman Gavan Herlihy told Parliament last night during debate on the Appropriation (2000/01 Estimates) Bill.

"Product price forecasts are positive for New Zealand's farming families and the provincial towns which depend on farmers' cash flows.

"But to rebuild after the dual challenge of the Asian Crisis and the 97/98 droughts it is imperative that the current good times are sustained into the future; not just this season but next season and the season after that.

"Unfortunately this Labour/Alliance Government is doing the opposite for rural New Zealand. Tuesday's lead article in the "Dominion" newspaper says it all: 'Farmers Lose Faith in Labour.'

"Farmers can see that their improved gross incomes are being quickly eroded by rising costs, because this Government has lost control of the economy.

"Fuel prices, fertiliser prices and equipment costs are all heading up. "Last year (1999-00) the average sheep and beef farm spent $4,800 on fuel. This season the Meat and Wool Board's Economic Service believes that will jump to $7,820, a massive 63 percent jump.

"Ravensdown has just announced a $40 per tonne increase for urea, up 16%. Superphosphate costs are rumoured to be in for major increases once forward exchange cover runs out.

"Major price rises have been signalled for tractors and other agricultural equipment, and interest rates are up 2 percent on this time last year. The Economic Service estimates that debt servicing costs, resulting from the creep in interest rates, will cost the average sheep and beef farmer $4,500. Financial commentators expect the Reserve Bank to raise interest rates again pre-Christmas. "The shearing industry has used the opportunity of improved wool prices to hike up shearing and contract rates. Contract rates for pre lamb ewe shearing are $270 per 100, compared to last year's rate of $245 per 100. Will this 10% increase be reversed when the dollar goes back up? Wishful thinking!

"History will repeat itself. The surge of input price increases during a period of devaluation gets locked into farming's cost structure even when the exchange rate recovers.

"Labour's agenda is robbing the rural sector of the longevity of their improved cash-flows. If, as the Dominion reported, farmers have lost faith in Labour, it's for good reason," Mr Herlihy said.


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