RCNZ: The challenge of cost shocks


Cost volatility and its drivers are the major issues currently facing rural contractors

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Andrew Olsen, CEO of Rural Contractors NZ, says the industry is seeking to remain viable during the highest levels of inflation in recent memory. His organisation has been working constructively with Federated Farmers over recent months to develop an accord on cost volatility that works for both contractors and farmers.

In August, rural contractors were due to head to five regional roadshows with costs at the centre of discussions.

"It’s timely to talk about cost shocks in the sector," says Andrew.

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RCNZ CEO Andrew Olsen and Federated Farmers CEO Terry Copeland discussed pricing mechanisms at July’s Primary Industry Summit

"Contractor and farmers are well aware that cost is entering the system, and we want to make sure there’s both a legal and responsible way for both sides to transparently meet this challenge."

He says the roadshows were an opportunity to refresh contracts that may have served contractors well in the past but were in need of some revision to deal with the current inflationary pressures.

"It’s vital to the food and fibre sector that we get this right and that farmers, growers, and contractors are all aware of and honour their contractual obligations."

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NZX’s Head of Insight, Julia Jones was to be the keynote speaker at the roadshows.

She was tasked with bringing together indices that properly track costs in fuel, fertiliser, and agrichemicals. This will help establish an independent measure based
on offshore pricing changes as they rise
and fall.

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