Some pass on at least a portion of their rising costs to customers, adding to pressure on household budgets.
Farms are businesses too, of course, but farmers and growers seldom have the option of passing on extra costs. They’re price-takers, more or less reliant on what their meat or dairy processor pays them, in turn based on what can be sold in the highly-competitive international marketplace.
Fertiliser prices have settled a bit and there’s a ray of hope interest costs might ease, but farmers — like other businesses — are seeing rising freight, labour, fuel, insurance and local government costs.
Worse for farmers, there’s a compounding effect. Think about veterinary services, for example. Vets are facing their own rising costs and there’s a shortage of them, so they tend to be able to pass on fuel, labour and other cost rises.
Animal welfare is a farmer priority, so they just have to absorb those costs. That’s just one example.
The Federated Farmers July Farm Confidence Survey shows 20% of Southland and Otago farms are currently making a loss and another 36% are only breaking even.
Next time you hear us railing about over-the-top national and council regulation that add to food production costs for little or no gain for the environment or anything else, perhaps you’ll empathise.
