Price increase to put spring in sheep and beef farmers' step

Sheep prices rose 10 per cent in the September quarter. Photo / NZME

New Zealand sheep and beef farmers got higher prices in the September quarter, outpacing the rise in the prices they paid, according to the latest producers price index.

Sheep, beef cattle and grain farming output prices climbed 10 per cent in the quarter on higher meat prices, while their input prices increased 0.7 per cent. Dairy cattle farming posted an 8.9 per cent increase in output prices on the rebound in farmgate milk prices, while their input prices edged up 0.2 per cent.

In the agriculture, forestry and fishing sectors, output prices rose 0.9 per cent in the quarter, compared to a 0.5 per cent increase in input prices, though prices received fell 1.8 per cent on an annual basis, more than the 0.5 per cent drop in prices paid.

Across all producers measured by the survey, prices received, or the output price, increased 1.3 per cent in the three months ended September 30, while prices paid, or input prices, advanced 1.6 per cent, Statistics New Zealand said.

The farm expenses price index, also released yesterday, showed a 0.8 per cent decline in the September quarter, led by a 5.1 per cent drop in interest rates, which captures a period when Fonterra Co-operative Group rolled out its interest-free loans to cash-strapped dairy farmers in the face of a reduced payout. On an annual basis, farm expenses were down by the same amount, owing to cheaper fuel.

While farmers benefited from wider margins in the quarter, manufacturers were squeezed by reduced supply of livestock and a weaker currency driving up import costs. Meat and meat product manufacturing output prices rose 5.5 per cent, lagging behind an 8 per cent gain in input prices, and dairy product manufacturing output prices increased 0.5 per cent while input prices climbed 6.3 per cent. The wider manufacturing sector reported a 1.5 per cent rise in output prices in the quarter, smaller than the 4.1 per cent gain in input prices, though on an annual basis prices received fell 1.8 per cent while prices paid dropped 2.5 per cent.

The quarterly increases in input and output prices ended five consecutive declines in both series, and on an annual basis, prices received by producers increased 0.2 per cent while the prices they paid fell 0.2 per cent. Over the same period, consumer price inflation increased 0.4 per cent, while wage inflation in the private sector advanced 1.8 per cent.

Construction industry prices rose in the quarter, with output prices up 0.4 per cent and input prices 0.7 per cent, as new houses sold at higher prices, offset by increased labour costs and more expensive raw materials. On an annual basis, prices received advanced 2.3 per cent, more than the 0.9 per cent rise in prices paid.