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Indirect Costs Take Toll on New Zealand Farm Spend

29 May 2015

NEW ZEALAND – Farm input prices have seen a rise for beef and sheep farmers in New Zealand despite lower direct input costs.

Higher farm interest and local and central government fees have countered price decreases across fuel, seeds, fertiliser and lime, according to Beef and Lamb New Zealand’s economic on farm inflation report.

Overall, costs lifted 1.1 per cent for the year up to March 2015.

This follows a smaller cost increase last year and is offset by a 21 per cent fall in fuel costs.

Andrew Burtt, B+LNZ economist, explained that fuel had a limited impact as it accounts for under five per cent of beef and sheep farm expenditure.

"Of the 16 input categories, prices for 12 increased and four decreased,” said Mr Burtt. “The size and weighting of the increases more than offset the decreases."

He added: "Excluding interest, the underlying rate of on-farm inflation was -0.3 per cent – compared with +1.1 per cent when including interest – in the year to March 2015.

"It highlights the importance of interest expenditure in total farm expenditure. After fertiliser, lime and seeds, interest is the second largest area of expenditure on sheep and beef farms, accounting for 14 per cent of total farm expenditure.”


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