Sheep And Beef Farmers Have Been Hit By On-Farm Inflation At A Level Not Seen Since The Early 1980s

Sheep and beef farmers have been hit by on-farm inflation at a level not seen since the early 1980s. Beef and Lamb New Zealand’s Sheep and Beef on-farm inflation report shows inflation of 16.3%, the highest level in 40 years and more than double New Zealand’s annual inflation rate of 6.7%. Costs have risen across the board, but an 86.5% increase in interest on debt – making up 10.9% of total farm expenditure – is the largest contributor to higher inflation. Floating interest rates doubled from March 2022 to March 2023, while fixed and overdraft interest rates increased by around 50%. Beef and Lamb chief economist Andrew Burtt says 16.3% is the highest on-farm inflation rate since 1981-82, when it hit 17.1%. With inflation eroding farm profitability, and debt servicing a non-negotiable, farmers are looking for other ways to cut costs. Andrew Burtt says this will create a flow-on effect to our rural communities as services and farm inputs are reduced. In March, Beef and Lamb forecast a 30% decrease in average farm profit based on estimated on-farm inflation of 12-13%, but the latest numbers meant farm profit was likely to fall even further.