Fuel price hikes soften gains

The price of fuel has increased significantly in the past year. Photo / File

Strengthening export dairy prices have underpinned an annual 4.1 per cent gain in producer output prices, which were softened by increased imported fuel prices.

Fonterra's last global dairy trade auction for the current season posted its fifth consecutive gain. Statistics New Zealand business prices manager Sarah Williams said for the year to March quarter, producer output prices had increased 4.1 per cent and input prices 4.2 per cent.

"The prices paid by fuel manufacturers were up 43 per cent in the year, mainly due to higher crude oil prices."

Otago Chamber of Commerce chief executive Dougal McGowan said the fuel prices were "hammered" during the period, creating more costs for the primary sector in general.

Analysts are now picking new-season dairy price forecasts will be in the $6.20 to $6.30 range.

"This is giving some assurance to farmers that things are going in the right direction."

Mr McGowan said with dairy prices trending upwards for the past nine months and milk production more settled in New Zealand and overseas, there should be less volatility in prices than in the past.

Ms Williams said the prices received by dairy cattle farmers and dairy product manufacturers in the year to March rose respectively 49 per cent and 22 per cent.

She noted farmgate milk prices had increased from $3.90 to $6kg/milksolids p nd the dairy manufacturers had received higher prices for milk powder.