Farmers splashing out on luxury goods

Booze, food, furniture and sports goods - increasingly, wealthy farmers are splashing their rising incomes on luxury items.

But city dwellers are spending more on what the farmers produce: meat, fresh fruit and vegetables.

A report by the Bank of New Zealand shows farmers out-spent their city cousins last year.

Life's good things are particularly catching farmers' eyes, the bank found, citing liquor, furniture and recreation goods as well as the more prosaic category of hardware goods.

High prices for beef and dairy products and attractive returns from lamb have made the farming community a little keener to open their wallets.

Fonterra injected an additional $1 billion into the rural economy last year as soaring milk powder prices boosted farmer payouts. Its annual result last July showed the average-sized Fonterra farm would earn $416,500 in the 2004 year - up 17 per cent on 2003.

The payout is expected to fall this year as the cost of the high dollar starts to bite. Economists are also picking a drop in world agricultural commodity prices will affect the rural economy, although the fundamentals of the sector remain strong.

Farmers increased their liquor spending last year by 4.5 per cent, an item townies decreased their budgets for by 2.3 per cent.

Country people spent an extra 2.6 per cent on recreational goods, compared with townies who only increased spending in this category by 0.8 per cent.

Hardware store spending for farm folk rose 10.2 per cent, compared with just 4 per cent for townies.

In town, shoppers are generally more concerned with their bellies.

City folk are spending more on food, increasing the amount spent on fresh meat, fruit and vegetables by 8 per cent last year, compared with a more meagre 2.3 per cent increase in this category by farmers. Citysiders' takeaway spending rose the most of any category - 17 per cent.

But the bank found farmers to be the most eager spenders.

"Over 2004, farmer retail spending is estimated to have grown 7.5 per cent, while city-based spending growth was 6 per cent," the bank found.

BNZ chief economist Tony Alexander was somewhat taken aback by the farmers' continued willingness to part with their cash.

"The townies are spending more on appliances than the farmers, so maybe the city dwellers are buying the TVs but the farmers are buying the couches to watch them on," he speculated.

The bank collects the data by analysing eftpos and credit card transactions to measure the categories of goods and services we buy.

TOWN V COUNTRY

Country people outspent their city cousins in 2004 as the rural economic boom rolled on.

Urban dwellers spent more on fresh foods and electrical appliances in 2004.

Country folk increased their spending on liquor, takeaways and recreational goods.