Although the inflation rate has slowed, input prices continued to increase, just at a more modest rate.
Farmers continue to face substantial cost increases, particularly in areas such as interest, insurance, and animal health.
Interest rates remain one of the main drivers behind on-farm inflation, with a 12 per cent increase in interest costs contributing half of the overall 2.8 per cent inflation rate in the last year, as borrowing is a significant item for farming businesses.
High interest costs have been especially difficult for farmers, impacting their cash flow and profitability.
Farmers found some relief in the cost of fertiliser, lime, and seeds which decreased by 4.2 per cent.
Acland said these persistent price increases have had a “massive negative effect” on farm profitability and the financial stability of New Zealand farmers.
“Farmers are currently under enormous pressure financially, but we recognise the impacts are being felt widely, the knock-on effect this has on rural communities and regional towns is huge.”
Beef + Lamb NZ forecasted that sheep and beef incomes will be 54 per cent lower this year and most farmers will not make a profit.
A key driver of this fall in profitability was increased costs, coupled with softer prices for sheepmeat.
On-farm inflation was lower than consumer price inflation, which was 4.0 per cent between March 2023 and March 2024.
However, the ongoing high costs of essential farm inputs highlight sheep and beef farmers’ challenges.
Beef + Lamb NZ’s report shows the importance of understanding that while the rate of price increases has slowed, significant inflation over recent years and high cost levels continue to pose financial challenges for farmers.
Acland said the report provided a detailed analysis of the changes in farm input prices and their impact on farm expenditure and offered valuable insights for farmers navigating these economic pressures.
“Farmers are still feeling the squeeze from high interest rates and other essential expenses.”
