Lower interest rates are helping farm budgets, with Beef + Lamb New Zealand’s latest Sheep and Beef On-farm Inflation report showing total on-farm inflation was flat for the second year in a row.
The on-farm inflation rate was -0.9 percent in the year to March 2026. This follows a 0.6 percent fall in 2024-25.
The overall result was driven by a fall in interest rates which account for 18 percent of total farm expenditure and is the largest single expenditure category for sheep and beef farms.
The findings come at a time when sheep and beef farmers are experiencing record returns and continuing strong international demand for New Zealand red meat.
“There’s no doubt the red meat sector is in a stronger position than we’ve seen for some time. But while revenue has improved, we know that input prices are moving just as quickly. The focus now is on building resilience for whatever comes next,” B+LNZ Chair Kate Acland says.
The report provides a detailed analysis of the changes in farm input prices and their impact on farm expenditure, offering valuable insights for farmers developing their budgets.
The annual report does not cover the impacts of the conflict in the Middle East. The Strait of Hormuz closed on 28 February, leading to sharp increases in fertiliser and fuel prices.
In the year to March 2026, the report shows that when interest is excluded, underlying on-farm inflation rose 3.9 percent. This exceeded the Consumers Price Index (CPI) increase of 3.1 percent for the same period, meaning that most farm input prices are rising faster than general consumer prices.
The price of fertiliser, lime and seeds increased by 8.1 percent, the report shows. These products are the second largest farm expenditure category, accounting for around 15 percent of total expenditure.
There were also increases in rates (up 9.2 percent in the year to March), electricity (up 7.1 percent) and fuel (up 3.1%).
With interest rates forecast to rise later this year, Acland says that on-farm inflation is expected to increase in 2026-27.
“Farm input prices are significantly above pre-2021 levels. Over the past five years, cumulative on-farm inflation has increased by 30 percent, compared with 25 percent for CPI.
“However, the continuing strong international demand for the high-quality meat and wool that New Zealand sheep and beef farmers produce means our farmers are well-placed to meet increasing input prices. They will need to remain vigilant to ensure they are maximising the value of all farm inputs.”
Read the full report (PDF, 4.8MB)
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