Shearing cost rise ‘significant’ for farmers

The cost of getting your sheep shorn rose by more than 11 per cent last year.

It was the most significant price increase farmers faced in the year ending March 2019, according to the latest Beef + Lamb New Zealand Economic Service Sheep and Beef On-Farm Inflation

Report.

B+LNZ Economic Service chief economist Andrew Burtt said shearing expenses have been the single biggest increasing expenditure over the past 14 years following the 25 per cent pay rate increase for shearing contractors.

Fertiliser, lime and seeds increased 6.2 per cent, and council rates by 5.1 per cent.

Burtt said these expenses contributed substantially to the 3 per cent rate of on-farm inflation.

On average, shearing, fertiliser, lime and seeds accounted for a quarter of farm expenditure and nearly 60 per cent of the overall on-farm inflation.

The report identifies annual changes in the price of goods and services bought by New Zealand sheep and beef farmers.

The overall on-farm inflation rate is determined by weighting the changes in prices for individual input categories by their proportion of total farm expenditure.

Of the 16 input categories, prices were up to some degree in all categories except for weed and pest control, down 0.2 per cent.

Burtt said low interest rates continued to be important because interest expenditure accounted for 14 per cent of total farm expenditure, which makes it the second largest category of sheep and beef farm expenditure.

In contrast, consumer price inflation, which is measured by the consumer price index (CPI), was up 1.5 per cent in the year to March 2019.

Over the past decade, the CPI has increased 6.8 percentage points more than on-farm inflation.

Shearing costs increased by more than 11 per cent last year.