The finding comes from ANZ's latest Agri Insights report, which analysed the financial performance of more than 4000 dairy, red meat, kiwifruit, arable and pipfruit customers, comparing the 2020-24 period with the previous five years.
It found that while general inflation had stabilised in recent times, cost increases within the farming system have become structural, meaning farms now need to lift productivity just to stand still.
Lorraine Mapu, ANZ NZ's managing director of business and agri, said events playing out in the Middle East are a reminder that global uncertainty - from geopolitical tensions to fuel supply and input volatility - add another layer of complexity for farmers.
"While we're not currently receiving customer requests seeking specific support for issues linked to the conflict, we're staying close to our customers and remain focused on supporting them through any emerging challenges," Mapu says.
"What this research shows, though, is that the businesses best placed to navigate that uncertainty are the ones with strong fundamentals, good visibility over their costs, and the ability to keep investing in productivity through the cycle.
"Farming is now a higher-cost business than it was five years ago, and that's not something that unwinds when inflation cools.
Read More:
- Strong Dairy and Beef Prices Lift Confidence Across New Zealand Farming Sector
- Fonterra capital return could boost GDP – ANZ Report
- Agriculture a “shining light” for NZ economy, says ANZ CEO Antonia Watson
"The standout performers aren't necessarily expanding or taking bigger risks - they're the ones who know their systems well, time their spending carefully, and keep finding small productivity gains year after year."
The report shows the gap between average farms and the top performers continues to widen, pointing to significant untapped productivity potential across the sector.
