In good news for farmers and other exporters, the latest figures from the ANZ, and the overnight Global Dairy Trade Auction show things are looking up.

The ANZ’s commodity price index edged up to a new record in May, boosted by the start of the kiwifruit season.

Other commodities driving the increase were skim milk powder, lumber, cheese and sheepmeat, rising around 2 percent, while log, venison and seafood recorded more modest gains.

Whole milk powder was the surprise disappointment in the index, falling 4 percent, while apple, beef and wool all eased slightly too.

ANZ Economist Steve Edwards says while there was an overall increase, it was modest compared to recent figures.

We’re still seeing rises, just not as strong.

“We’ve seen some of the prices peter out, but we’re at a very elevated level.

“Structurally, we’ve seen a lift in prices, and as long as they stay around this level, the country will do very well eventually.

“It’s a matter of time.”

Steve Edwards says farmers may now be looking at reducing their dependence on banks for support, and that’s good news for New Zealand long term.

 “Currently we’re seeing the rural sector pay off more debt and deleveraging rather than going out and spending.

“With these record price levels, historically it goes hand in hand with better times for the economy.

“When you look back at the last 50 years or so, whenever the terms of trade are this high it’s always concurrent with the economy doing well.”

The latest Global Dairy Trade auction saw a 4.5 percent lift across all products overnight on Wednesday.

Fonterra says the prices reaffirm dairy’s position as an economic leader for the country.

Staying with the commodity prices, beef and lamb New Zealand is welcoming the news of long overdue high returns as farmers face increasing overheads.

Beef and Lamb’s economic service director Rob Davison says most farmers were staring down the barrel of increased debt due to increases in the price of fertiliser, fuel, and bank interest rates.

"People forget that on a sheep and beef farm the average profit was about $9,700 per farm.

“Farmers were actually borrowing money just to survive – and when you borrow money, you’ve eventually got to pay it back; that’s what we’re seeing now.

“It has been very difficult, which was indicated by the low use of fertiliser that was going in, which lowers production and winds everything back a bit.

“These prices more than compensate for stock loss in many cases.”