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Input Prices Down for Sheep Beef Farmers

08 July 2014

NEW ZEALAND - Prices for inputs used on New Zealand sheep and beef farms decreased 0.6 per cent in the year to March 2014, following no change in the previous year according to the Beef + Lamb New Zealand Economic Service Sheep and Beef On-Farm Inflation 2013-2014 report.

The decrease has been driven by the decline in the cost of fertiliser, interest and fuel, says B+LNZ chief economist, Andrew Burtt.

Of the 16 categories of inputs, prices for 12 increased and four decreased, however the size and weighting of the decreases more than offset the increases.

Prices decreased by 6.1 per cent for fertiliser, lime and seeds; 3 per cent for interest; 2 per cent for fuel; and 0.1 per cent for weed and pest control. Electricity and repairs, maintenance and vehicles accounted for the largest price increases during the 12 months to March 2014 and were up 4.9 and 2.6 per cent respectively.

Over the most recent five-year period, on-farm inflation was 2.9 per cent, and 36.2 per cent over 10 years. In comparison, consumer prices increased by 10.9 per cent over the last five years, and by 28.5 per cent over the last 10 years.

Excluding interest the underlying rate of on-farm inflation was -0.1 per cent and was down from 0.7 per cent for the previous 12 months. It is only the second decrease in underlying on-farm inflation since this report started in 1972-73.

The sheep and beef on-farm inflation report is compiled by B+LNZ's Economic Service and indicates the annual changes in farm input prices. On-farm inflation is different to total farm expenditure, which also takes into account the volume of inputs used on farm.

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