1 Jun 2011

Record prices likely to offset high farming costs

9:14 am on 1 June 2011

Beef and Lamb New Zealand says record prices for lamb, beef and wool should offset a significant hike in farming expenses.

Farm business costs increased by more than 4% in the year to the end of March compared with the same period the year before, the organisation's latest survey has found.

That equates to an extra $11,000 for an average sheep and beef farm.

Beef and Lamb economic service executive director Rob Davison says the increase is been driven by higher fertiliser and fuel prices, and bank interest rates.

However he says the higher farming costs shouldn't impact on farm profitability, given the higher prices for lamb, mutton, wool and beef.

Over the past five years sheep and beef farming costs have gone up by nearly 23%, he says, while the Consumers Price Index has gone up just over 16% in the same time period.