‘Nothing left to cut’: Diesel surge squeezes rural New Zealand

Friday, 27 March 2026

Spiralling diesel prices are rippling through every corner of the rural economy, pushing up costs and wiping out profits.

A North Canterbury farmer says he has never experienced anything like it in his lifetime, while the owner of a construction business in Reefton says he feels like crying.

Petrol prices have increased by almost $1 per litre on average in the past month, according to price tracker Gaspy, while diesel costs have doubled as global energy markets react to Iran's military grip on the Strait of Hormuz following the war launched by the US and Israel.

Finance Minister Nicola Willis told the House on Thursday diesel, petrol and jet fuel will be given different alert levels as part of the Government’s fuel shortage response. More details would be given when Willis and Resources Minister Shane Jones announced the plan about noon on Friday.

For Leeston farmer and Federated Farmers Arable Group chairperson David Birkett, the timing of the price spike could not be worse.

The sector was currently in one of its most fuel-intensive periods, finishing harvest and preparing to replant crops.

“We’re using a lot of machinery at the moment. If we don’t get those crops in the ground, the food doesn’t get to the supermarket.”

On a typical harvest day, his operation can burn through around 1500 litres of diesel.

“That used to cost us about $2000 to $2500. Now it’s costing us about $4500.”

Unlike many industries, farmers often cannot pass these costs on.

“We sign contracts for the year, so we don’t have a mechanism to adjust prices quickly. We just can’t absorb it any more.”

Discussions were under way across the sector about how to fairly share rising costs along the supply chain.

“It's not fair that one part of the sector should pay to cover it.”

Amberley sheep and beef farmer Andy Mason said the speed and scale of the increase was unprecedented, with fuel costs rising sharply in a matter of weeks.

“The jump we’ve seen in the last month — I’ve got nothing to compare it to in my lifetime.

“But what we did do was that we filled up everything, as soon as the Iran war started because I could see that this was going to be a problem. So we filled up every vehicle, every fuel tank, chains and even filled up the lawnmower.”

He said the impact for many farmers went far beyond their own fuel use, with rising prices pushing up costs across every part of the operation — from transporting stock to buying fertiliser.

The biggest challenge was the lack of options, with years of cost-cutting leaving little room to absorb further increases.

“We’ve already taken all the fat out of the system. There’s nothing left to cut.”

Profits wiped

Reefton Crane and Construction owner Paul Haul said the impact had been immediate.

When asked about the situation, he was blunt: “I'm just sitting in the corner crying.”

He said diesel increases were wiping out profits on some jobs.

A single return trip to Christchurch could use 300l to 400l of fuel, he said.

“There’s another $600 to $800 gone — and that’s your profit. Your margins just disappear.

“Diesel has basically doubled. It’s been hit after hit.”

Like others, businesses were being forced to pass costs on, even at the risk of losing customers.

“You try to stay competitive, but you can’t at these prices.”

Fuel surcharge looms

Darfield’s Rural Fields operations manager David Buckley agreed, saying the business would likely introduce a fuel surcharge in future contracts to cope with rising costs.

He was also reconsidering hiring an additional worker next season and tightening how jobs were planned and carried out as rising costs already changed behaviour on farms. Discretionary work such as paddock development and regrassing was being put on hold, he said.

“The farmers can’t pass the price on. They’re price takers, not price setters.

“There won't be any extra work done like we've been doing this year because the cost has gone up for the farmers too. It is a flow effect.”

Buckley said for rural communities, where fuel was essential rather than optional, the stakes were especially high.

“We don’t have public transport out here. We rely on vehicles to do our work and get around.”

The effects are not limited to farms.

Rose Craven, of the Darfield Food Bank, said the organisation had reduced its trips across the region to collect food to one day a week due to rising fuel costs.

While she had not yet seen an increase in demand for food parcels, they were preparing for it.

Meanwhile, at Oxford’s Café 51, barista Bryony Lightbody said rising fuel prices had become a “common conversation” among customers, many of whom were asking where to find the cheapest petrol.

She had also noticed a drop in foot traffic.

“There’s a slowing down of people coming out. Families aren’t doing as many day trips unless there’s an event on.”

Some locals were adapting by carpooling to cut costs, while overseas travellers appeared to be helping fill some of the gap. Still, business had become less predictable.

“You might be busy one day and then suddenly it’s quiet and you’re finishing early.”