Lower input costs a relief for farmers

The report on farm inputs from agribusiness lender Rabobank says international prices for key inputs have fallen recently and, although domestic prices were taking time to follow, there would be some relief for NZ farmers as input prices were set to remain below historical highs during 2009. The international market had seen US dollar prices for major inputs such as fertilisers fall by between 60% and 75% since their record highs in mid-2008 reports The ODT. However, according to the report's author Rabobank analyst Adam Tomlinson, a sharp reversal of the NZ exchange rate against the US dollar in late 2008 effectively offset a large portion of declining international prices, tempering the benefits felt by farmers.  "International prices for fertilisers are expected to remain low for the next few years in view of increased fertiliser production capacity at lower price levels flowing through to the supply chain." Agrochemical prices are also predicted to drop from record highs in line with wider commodity prices, although demand in 2009 remains unclear due to the uncertainty in the global economy.  Since May 2008 ocean shipping freight costs have fallen dramatically with new capacity coming on line, lower bunker fuel costs and lower trade volumes.   NZ farmers have also had to focus on cost efficiency and sustainability due to rapidly rising farm input prices and environmental restrictions. International prices for manufactured farm inputs were expected to be significantly lower in 2009 than in 2008 with the fallout of the global financial crisis impacting all commodity markets.