Friday, 03 June 2022 10:25

On-farm inflation hits 40-year high

Written by  Staff Reporters
B+LNZ economic service chief economist Andrew Burtt. B+LNZ economic service chief economist Andrew Burtt.

The latest on-farm inflation rate has hit 10.2%, the highest it’s been since 1985-86 according to a recent report from Beef + Lamb NZ (B+LNZ).

The Sheep and Beef On-Farm Inflation 2021-22 report measures the annual changes in farm input prices.

The overall on-farm inflation rate is determined by weighting the changes in prices for individual input categories by their proportion of total farm expenditure.

While on-farm inflation had been comparable with the CPI in recent years, the 2021-22 report shows farmers are now facing significant price increases in all but one of 16 input categories.

“Sheep and beef farm input prices increased by 10.2 percent in the year to March 2022, and when interest rates are excluded, input prices were up by 10.7 percent,” says B+LNZ Economic Service Chief Economist Andrew Burtt.

He says that with a tight labour market and increased import shipping costs, farmers have seen increased prices for contractors, tradespeople, machinery and parts for operating farm infrastructure and vehicles.

“Fuel prices have continued to rise since March 2022, and fertiliser prices are expected to rise this month, too.”

He says the increase in farm input prices is largely due to the rise in cost of three core areas of expenditure: fertiliser, lime and seed (up 23%), interest (up 5.9%) and repairs, maintenance and vehicles (up 10.4%).

“Fertiliser, lime and seed prices are significant for sheep and beef farmers because this area of expenditure comprises 17.5% of total farm expenditure. The prices of almost one third of categories of farm expenditure increased by 10% or more.”

With added financial pressures, which are expected to increase, B+LNZ says it is concerned that increasing regulatory requirements from the Government, such as freshwater and biodiversity rules, will stretch farmers even further.

“There’s a lot of costly regulation coming at farmers at present,” says B+LNZ chief executive Sam McIvor.

“Given the importance of agriculture in driving our economy’s recovery, it’s critical that the Government get its policy settings right,” he says.

McIvor says many of the increased costs caused by inflation are outside of the Government’s control, but they can ensure policy changes are needed, workable and cost-effective for farmers.

“Farmers are absolutely committed to the protection of the environment, including biodiversity. They actively manage 1.4 million hectares of native vegetation on thousands of farms across the country, so it’s critical that policies are enabling and supportive, rather than simply putting costly barriers in the way.”

More like this

New CEO for meat board

Nick Beeby has been appointed as the new chief executive of the New Zealand Meat Board (NZMB).

OSPRI's costly software upgrade

Animal disease management agency OSPRI has announced sweeping governance changes as it seeks to recover from the expensive failure of a major software project.

TB free again!

Herds in the West Coast settlement of Hari Hari are TB free after a four-year battle to get on top of the area's last outbreak.

Farm returns recovering

Red meat farmers are in "a slightly better place" than they were a year ago, according to Beef+Lamb NZ chief economist Andrew Burtt.

Featured

‘Nanobubble’ trial trims irrigation water usage

North Canterbury dairy farmer and recently-elected deputy chair of DairyNZ, Cameron Henderson, is enjoying a huge reduction in irrigation water use after converting a pivot irrigator to drag perforated drip tubes across the ground instead of elevated sprinkler heads.

Editorial: Elusive India FTA

OPINION: Without doubt, a priority of the Government this year will be to gain traction on the elusive free trade deal with India.

Sport star to talk at expo

Rugby league legend Tawera Nikau is set to inspire, celebrate and entertain at the East Coast Farming Expo's very popular Property Broker's Evening Muster.

National

Sweet or sour deal?

Not all stakeholders involved in the proposed merger of honey industry groups - ApiNZ and Unique Manuka Factor Honey Association…

Machinery & Products

Loosening soil without fuss

Distributed in New Zealand by Carrfields, Grange Farm Machinery is based in the Holderness region of East Yorkshire – an…

JCB unveils new models

The first of the UK’s agricultural trade shows was recently held at the NEC Centre in Birmingham.

» Latest Print Issues Online

The Hound

Times have changed

OPINION: Back in the 1960s and '70s, and even into the '80s, successive National government Agriculture Ministers and Trade Ministers…

Hallelujah moment

OPINION: The new Public Service Commissioner Sir Brian Roche has just had the hallelujah moment of the 21st century in…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter