Source: Radio New Zealand
AFP / William West
The cost of running a farm in New Zealand is more than a quarter higher than it was before the Covid pandemic.
ANZ’s latest Agri Insights report, which analysed financial performance across more than 4000 dairy, red meat, kiwifruit, arable and pipfruit customers over five years, found farm operating costs across the board were 27 percent higher than before Covid.
This was driven largely by increased labour and input costs like fertiliser, and on-farm cost inflation becoming structural.
The gap between average farms and the top performers continued to widen, pointing to significant untapped productivity potential, with leading operators consistently generating materially higher earnings per hectare through system optimisation rather than expansion.
The report’s co-author and ANZ’s head of strategy and execution – business and agri Marcus Bousefield said it showed farms must lift productivity just to stand still.
“Really everything is up on that pre-Covid area in terms of costs. We’ve seen it as a structural shift as opposed to just being inflationary and moving with the inflation cycle.”
Despite having the largest cost increases – which was reflective of their labour-intensive nature and impacts of wage pressures during and after the pandemic – the report found both dairy and kiwifruit had some of the strong returns.
Total kiwifruit farm income rose 59 percent driven by the maturing of post-PSA plantings and higher orchard productivity, while dairy also saw higher earnings per hectare achieved through improved milk production per cow and better herd performance, rather than expansion.
Red meat farms had modest income growth, with a wide gap between top-performing operators who earned about 80 percent more per hectare than poorer-performing counterparts.
Pipfruit faced the most challenges, including labour shortages and multiple weather events.
Bousefield said the report showed the strongest performances were linked to reinvestment and commitment to improving productivity.
“You can look to the singular price in commodity prices being a key leader of performance but that is always outside of farmers’ control.
“It’s really the sum of the parts of all the other components that drive the topline revenue piece that has a bigger bearer on what we saw as performance of the top 25 percent.”
Bousefield said this included factors like the execution of buying and selling, crop management and animal efficiency, particularly in the dairy sector.
He said farming was multi-generational industry where decisions made today would pay off in later years. He said it was at a junction point where stronger markets, coupled with agritech advances provided opportunity to improve efficiencies on farm.
Bousefield cautioned that conflict in the Middle East would continue to create global uncertainty in the shorter term.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
