Diesel Prices and Other Farming Facts: an Explainer
In my work in rural mental health and explaining the complexities of people in agriculture to social service professionals, I hear the same frustrations again and again: when diesel prices spike, the online commentary fills with blame, anger, and misunderstandings. Most of this comes from people who’ve simply never been told how farming actually works, or how closely rural and urban wellbeing are connected. So let’s slow things down and unpack why diesel costs hit farmers so hard, why it affects everyone, and why some common claims online are simply untrue. It’s OK if you didn’t know these things, but I hope you can learn something here.
Why Diesel Costs Hit Farmers First — and Hardest
Diesel isn’t optional on farms. It runs almost everything that grows, feeds, harvests, or transports food. When diesel doubles in price, farmers can’t “use less” any more than a hospital can use less electricity during surgery.
Some scale:
NZ agriculture uses 200+ million litres of diesel each year.
A dairy farm uses 10,000–20,000 litres annually.
Arable farms may use 30,000–60,000 litres or more.
A 40–60 cent rise per litre means $8,000–$20,000+ in unavoidable extra costs — often the difference between breaking even and going backwards. And when farmers’ costs rise, the cost of producing food rises. That eventually reaches processors, transporters, supermarkets, and finally consumers.
Fertiliser Costs Are Rising Too
Urea — the most widely used nitrogen fertiliser — has also doubled at times. A farm using 20–40 tonnes a year can face $6,000–$20,000 in extra fertiliser costs. Farmers can’t simply “use less” without reducing food production.
Common Myths — and the Realities
“Farmers just got a huge payout.”
Only some dairy farmers received higher payouts — and only those supplying Fonterra (around 75% of dairy farms). Sheep, beef, deer, arable, and horticulture farmers received nothing similar. And even good dairy years must carry farmers through the inevitable bad ones. Dairy farms account for around 20–25% of all farms - sheep and beef farms are around 50%; arable/cropping farms and horticulture, fruit, and vegetable growers make up the remainder.
“Farmers get huge tax breaks.”
No — farmers follow the same tax laws as every other business.
What looks like “tax breaks” are simply standard business deductions:
fuel used for business
repairs and maintenance
depreciation
wages
feed, fertiliser, animal health
insurance and interest on loans
A trucking company deducts diesel. A farm deducts diesel. Same rules — different industry. If a farm pays little tax in a tough year, it’s because it made little profit, not because of special treatment.
“But farmers were against getting rid of diesel, weren’t they?”
Farmers aren’t anti‑environment — they’re practical. Right now, there is no viable alternative to diesel for the heavy, long‑hour, high‑horsepower work NZ farms require.
Electric tractors exist, but they are:
small (40–70hp)
designed for vineyards/lifestyle blocks
unable to run 12–18 hour days
far more expensive
limited by rural power infrastructure
Full‑sized electric tractors (150–300hp) don’t exist yet. Farmers will adopt alternatives when they actually work.
“Farmers wanted this government, so the fuel situation is their fault.”
Rural communities are a smaller part of the population (around 16%) and don’t vote as a single block. Farmers don’t control national outcomes — they simply deal with the realities of global fuel prices, fertiliser costs, and market volatility. These pressures would exist under any government.
“All our food is imported anyway.”
False. New Zealand produces:
most of its vegetables
all of its dairy
most of its meat
large volumes of fruit, grains, seeds, honey, and eggs
One exception worth a mention is the new American butter on shelves. It’s cheaper because US farmers receive heavy subsidies from their own governments, and many cows are fed grain, soy, and GE crops in intensive systems. The price tag doesn’t reflect NZ’s environmental or welfare standards. NZ farmers have not been subsidised since the early 1980’s.
“Farmers get big payouts after weather events.”
They don’t.
No automatic compensation
No insurance for widespread natural disasters
Government grants are small ($2,000–$10,000) and only for immediate clean‑up
Rural Support Trust provides emotional and practical support, not financial payouts
Meanwhile, farmers face:
hundreds of thousands in damage
lost stock and crops
destroyed infrastructure
months or years of recovery
From the outside, “support packages” look like bailouts. In reality, the money is tiny compared to the losses. If a city business lost its building, stock, equipment, and income overnight, people would expect insurance or government support. Farmers don’t get that.
“Farmers get rich from supermarket price rises.”
Supermarkets set retail prices — not farmers. Farmers are often paid the same regardless of what consumers pay, and any increases they do receive are delayed by months or seasons.
Current farmgate prices (what farmers actually receive):
Bull beef: $7.20–$7.80/kg
Cow beef: $5.20–$6.60/kg
Lamb: $8.40–$9.50/kg
Mutton: $4.20–$4.70/kg
Venison: $9.30–$9.65/kg
These are driven by global markets, not supermarket mark‑ups. Any increase you are seeing now does not automatically mean that farmers are getting more - this is likely due to other factors such as supermarket, supplier or freight mark-ups. As you can see, there’s a huge discrepancy between these prices and what you pay for your piece of supermarket steak.
“Farmers are always whingeing to the media about something”
It often looks like farmers are constantly in the media complaining, but that’s usually because the media go to them, not because farmers are seeking attention. When something affects food production, fuel prices, weather events, or the national economy, journalists naturally want comment from the people directly involved — and that’s farmers. Most farmers don’t have time or interest in chasing media coverage; they’re busy running their businesses. They’re interviewed because their work is central to the story, not because they’re trying to dominate the news cycle.
Why Agriculture Matters to Everyone
Agriculture is not a niche sector — it is the backbone of New Zealand’s economy.
Without it:
NZ would lose 60%+ of export revenue
GDP would shrink dramatically
funding for health, education, and social services would fall
food prices would skyrocket
rural towns would collapse
urban unemployment would rise
A stable food system is national security. Countries that can’t feed themselves are vulnerable.
New Zealand can only buy high‑value imported goods — like iPhones, cars, laptops, and TVs — because we earn export dollars. And the majority of those export dollars come from agriculture. If we didn’t export food, we wouldn’t have the money to import the things we rely on every day. New Zealand doesn’t manufacture: phones, computers, TVs, cars, medical equipment, most pharmaceuticals, fuel, and machinery. We import almost all of these. To pay for them, we need export income. And more than 60% of that income comes from agriculture.
Do Farmers Care About the Environment?
Most do — deeply. Their livelihoods depend on healthy soil, clean water, and resilient ecosystems. Across NZ, farmers are:
fencing waterways
planting natives
improving effluent systems
reducing fertiliser use
trialling regenerative practices
A small minority do the wrong thing — just like in any sector — but they are not representative of the thousands working hard to improve their land.
New Zealand produces food more efficiently than many countries, especially those using grain‑fed or intensive systems. If NZ reduced production and other countries filled the gap, global emissions could actually increase. So the goal isn’t to attack farmers — it’s to support practical, science‑based improvements that work on real landscapes. Yes, agriculture contributes to emissions — just like transport, energy, construction, and urban consumption patterns. But farmers are already adapting: fencing waterways, planting natives, improving effluent systems, reducing fertiliser use, and trialling new practices. Environmental progress takes time, money, and workable technology, especially on steep, wet, fragile NZ terrain.
Why These Myths Matter
When people believe farmers are getting:
payouts
subsidies
tax breaks
special treatment
it fuels resentment and division. Farmers feel attacked for things they can’t control — global fuel prices, supermarket mark‑ups, or international markets.
And when public opinion turns against farmers, it becomes harder to have constructive conversations about:
environmental improvements
mental health
rural services
climate adaptation
food security
Misinformation doesn’t just hurt farmers — it hurts the whole country. Rural and urban New Zealand are not separate worlds. Sometimes it feels like there’s a divide — “city people” versus “farmers.” But the truth is, we are deeply interdependent. Urban New Zealand relies on rural New Zealand for food, exports, and economic stability. Rural New Zealand relies on urban New Zealand for services, infrastructure, and national policy.
When diesel prices spike, it’s not “a farmer problem.” It’s a New Zealand problem — one that affects every household, every supermarket, every business, and every taxpayer. So even if you’ve never set foot on a farm, diesel prices affect your grocery bill, your café brunch, your school lunches, and your weekly budget. When diesel prices soar, farmers struggle. When farmers struggle, food production becomes more expensive. When food production becomes more expensive, everyone pays more at the checkout.
Understanding this isn’t about taking sides—it’s about recognising that rural and urban New Zealand are deeply connected.