Moderate Increase of Input Prices for Sheep, Beef Farms

Fri, 01 Jun 2018

NEW ZEALAND - Rises across the board drive moderate increase of input prices for sheep and beef farms.

Sheep and beef farm input prices rose moderately in the year to March 2018 with on-farm inflation at 2.0 per cent, according to the latest Beef + Lamb New Zealand (B+LNZ) Economic Service Sheep and Beef On-Farm Inflation Report.

The report identifies annual changes in the prices of goods and services purchased by New Zealand sheep and beef farms.

B+LNZ Economic Service Chief Economist Andrew Burtt said an increase of 0.3 per cent across the three largest expenditure categories – interest; repairs, maintenance and vehicles; and fertiliser, lime and seeds – moderated greater price increases of smaller categories.

“Of the 16 input categories, prices were up to some degree in all categories except for fertiliser, lime and seeds – the largest category of expenditure – which was down 0.6 per cent.”

“Excluding interest, on-farm inflation was 2.2 per cent – the second year of increasing input prices after four years of relatively little change previously,” Mr Burtt said.

“It highlights the significance of current low and relatively stable interest rates because interest expenditure accounts for 14 per cent of total farm expenditure, which makes it the second largest category of expenditure.”

In contrast, consumer price inflation, which is measured by the consumer price index (CPI) that measures the rate of change in the price of goods and services purchased by New Zealand households, was up 1.1 per cent in the year to March 2018. Over the last decade, the CPI has increased by 7.1 percentage points more than on-farm inflation.

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.