NZ sheep, beef farmers reap higher output prices in September quarter

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

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

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

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

The farm expenses price index, also released today, showed a 0.8% decline in the September quarter, led by a 5.1% drop in interest rates, which captures a period when Fonterra Cooperative 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%, lagging behind an 8% gain in input prices, and dairy product manufacturing output prices increased 0.5% while input prices climbed 6.3%. The wider manufacturing sector reported a 1.5% increase in output prices in the quarter, smaller than the 4.1% gain in input prices, though on an annual basis prices received fell 1.8% compared to a 2.5% drop in prices paid.

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% while the prices they paid fell 0.2%. Over the same period, consumer price inflation increased 0.4%, while wage inflation in the private sector advanced 1.8%.

Construction industry prices rose in the quarter, with output prices up 0.4% and input prices rose 0.7%, 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%, more than the 0.9% rise in prices paid.

The capital goods index, another measure published today, showed a 1.4% increase in capital goods prices, due to the depreciation of the kiwi dollar, and more expensive computer equipment. On an annual basis, capital goods prices rose 3.6%.

(BusinessDesk)