Prices for farm inputs fell by 0.6 percent in the year to March 2025 reports Beef + Lamb New Zealand (B+LNZ).
B+LNZ’s annual on-farm inflation report, released today, says this is primarily due to lower interest rates, while there were also modest decreases in some other input prices such as weed and pest control, fuel and fertiliser, lime and seeds.
“This is a welcome respite for farmers after a 30 percent increase in prices since 2020,” says B+LNZ Chair Kate Acland.
An overall reduction in input prices, or deflation, is an infrequent occurrence.
Interest costs, which are a key driver of on-farm inflation, fell 13.9 percent.
The prices for weed & pest control and fuel also declined – by 5.3 percent and 3.7 percent. Prices for fertiliser, lime and seeds also fell by 0.7 percent.
However, the prices for other inputs increased, with insurance and rates up 11 percent and electricity up nearly 7 percent.
Underlying inflation – which is the change in farm input prices if interest costs is excluded – was 1.8 percent in the year to March 2025.
Kate Acland says farm-gate prices remain strong, and the outlook is relatively good.
“This is a positive change from recent years, when high on-farm inflation eroded profitability. This year, profits are expected to increase, even though total expenditure remains high.
“Overall, farmers have grounds for optimism.”
The on-farm inflation report says interest rates for farm lending are expected to ease further through 2025 and remain stable into 2026, providing further relief on debt servicing costs. However, it says any unexpected rise in inflation or global shocks could slow or reverse this trend.
Over the last decade, consumer price inflation and on-farm inflation have both been over 33 percent.
ENDS
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Read the full report here (PDF,6.5 MB)