Out of interest from Reuters news page on John Nicholsons www.agrinetinternational site. Any comments anyone? NZ Q3 wholesale inflation in surprise fall 2002-11-27 21:56:44 GMT (Reuters) WELLINGTON, Nov 28 (Reuters) - Lower dairy and meat prices pushed New Zealand wholesale inflation into negative territory in the September quarter, Statistics New Zealand said on Thursday when releasing data much weaker than market expectations. Prices of goods arriving at the farm and factory gate -- the producer price inputs (PPI) index -- fell 1.2 percent in the quarter, for an annual fall of 1.7 percent. Both numbers were the largest decreases since records began. "This is the largest fall in producers' price input prices since the PPI started in the December 1977 quarter," the government agency said in a statement. The outputs index, which measures prices leaving the farm and factory gate, fell 0.6 percent in the quarter for an annual 0.3 percent increase. Statistics New Zealand said the quarterly fall in output prices was the first since early last year, and the annual increase was the lowest since mid-1999. Economists polled by Reuters had expected on average a 0.4 percent rise in both the inputs and outputs index for the quarter. Falling input prices stemmed mainly from the dairy product manufacturing index, down 24 percent. Also making a contribution was the meat and meat product manufacturing index, down 2.5 percent due mainly to lower prices paid by manufacturers for cattle and pigs. Electricity also contributed, with prices of generation and supply down 3.3 percent. Output prices were also affected by dairying, with the dairy cattle farm index down 23.7 percent and dairy product manufacturing prices off 9.7 percent. "These indexes fell...as a result of lower payouts to dairy farmers and export prices for dairy products," the agency said. Producer price indices for the December quarter will be released on February 28. -------------------------------------------------------------------------------- Return to news index (c) Reuters 2002 Jack Caley

Jack, the PPI index has fallen and the fall seen in the dairy sector in percentage terms looks dramatic, but this is due to dairy prices for the last 2 years being exceptionally high, the dairy payout this year should be around $3.50 kg down from the previous years payout of $5.30 basically the milk price should be the same as it was a couple of years ago, in the last 2 years we have seen the combination of high production and high milk prices this has enabled farmers to spend on essential capital improvements, upgrade the milking shed or build a new one, improve the race ways and fencing, buy a new tractor, or purchase the most essential piece of farm equipment a new boat. Therefore with the predicted drop in milk price most farmers are able to sit tight and ride it out The New Zealand milk price reacts very quickly to the world price so my concern would be for the other side of the world, if the price has dropped in N.Z. how long will it be before it drops in the U.K.?