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Why has on-farm inflation increased for New Zealand’s beef and sheep farmers?

In a release that will come as great interest to New Zealand's army of sheep and beef farmers, the Sheep and Beef On-farm Inflation Report is bursting with intriguing facts and figures that serve as an at-a-glance update on the coming and goings of our industry.

With a vast array of numbers and graphs to get your head around, it can be quite a task for even the most brilliant number cruncher to make sense of, so we at Line 7 Terrain thought that it would be prudent to break it down into bite​-sized pieces, revealing the most important data.  

Put together by Beef and Lamb New Zealand (B+LNZ), there's a wealth of information to get your teeth into, so let's take a look at what has affected beef and sheep farming over the last year.

Input prices have risen

First things first, in the year leading up to March 2015, prices for inputs rose to the tune of 1.1 per cent, but why is this? According to B+LNZ Economic Service chief economist Andrew Burtt, it's all down to increases in the price of interest, on top of government rates and fees – both local and national.

This is interesting, especially when considering that there was a 0.6 per cent decrease the previous year. The relatively sizeable rise was also offset by the tumbling price of fuel, but not by much – this is because petrol and diesel makes for less than 5 per cent of sheep and beef farming expenses, over the course of a year.

Where were the biggest price increases?

As is to be expected, the most dramatic increases came in the shape of interest and government fees. Interest rates went up by 9.4 per cent, with local and national fees set at 4.9 per cent. Insurance accounted for the third-highest increase, at 2.4 per cent.   

Where were the largest falls?

By far and away the biggest drop of the 16 input categories was fuel, which fell by over a fifth (21.7 per cent). The second-steepest fall turned out to be fertiliser, lime and seeds way back at 2.3 per cent. Only weed/pest control and administration dropped into negative figures for the year leading up to March 2015.

"Of the 16 input categories, prices for 12 increased and four decreased. The size and weighting of the increases more than offset the decreases," said Mr Burt, summing up the report.

The cost of running a New Zealand farm has risen exponentially over the last year.