Pressure put on New Zealand's sheep, beef sector

by Bryan Salvage
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WELLINGTON, NEW ZEALAND — In-farm inflation for New Zealand’s sheep and beef sector was 7.6% for the year up to March 2009, according to Meat & Wool New Zealand’s Economic Service. This is the second-largest increase since 1986-87, said Rob Davison, economic service executive director.

Excluding interest, which decreased in price, the underlying rate of on-farm inflation was 10.7%, the highest since 1985-86. Fertilizer, shearing expenses and repairs and maintenance experienced the biggest price increases.

"The good news is fertilizer prices have decreased 11% since March," Mr. Davison said. "The price for a tonne of superphosphate has decreased 8.6% since March and DAP fertilizer has decreased 18.5%."

Prices paid for repairs and maintenance increased by 8.9%, closely followed by an 8.7% increase for insurance and an 8.3% increase for rent.

The cost of both fuel and interest on farm debt decreased in the year to March 2009, after showing increases last year. "Fuel prices decreased 14.2%, predominantly because of the fall in global oil prices," Mr. Davison said. "The price of interest on farm debt decreased 6.7%, reflecting overall lower interest rates indicated by the Reserve Bank official cash rate falling from 8.25% to 3.00% in the year to March 2009."

Local government rates and charges increased by 33.8% in the last five years, an average per-year rate of increase of 6.8%. However, rates increased 5.6% in the year to March 2009, which is the lowest rate of increase since 2004-05.

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