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The rural services company PGG Wrightson (PGW) is warning inflationary pressures on input costs will affect on-farm profits.
In a trading update, the company forecast operating earnings for the year ended June 2023 to be around $62 million, compared to the previous year's $67.2m.
It said trading for the first quarter was broadly in line with expectations.
"While this is back from last year's very strong [result], it is based upon our current assessment of a less certain operating environment. It is very early in the year however and we will be in a better position to assess after the busy spring trading period," PGW chair Joo Hai Lee said.
The company said exporters would also need to navigate expensive shipping costs and logistics issues.
However, Lee said the positive run for most New Zealand agricultural sectors looked likely to continue through the remainder of 2022 and into the coming year.
"While input prices are increasing, rising food prices are expected to be beneficial overall for the New Zealand's agricultural sector in our export receipts.
"At the same time this presents difficulties for New Zealand communities faced with rising domestic food prices," Lee said.
He said most agricultural industries faced similar pressures like other businesses, such as the tight labour market and production issues due to the Covid-19 pandemic.
Labour shortages constrained production, which limited fruit harvesting and led to delays in meat processing, Lee said.
"On balance, while we remain cautiously optimistic about the financial year ahead there are mixed signals in the macroeconomic environment. Consumers in export countries want high quality and safe food that our farmer and grower clients produce.
"Both beef and spring lamb schedules are forecast to remain positive and dairy commodity pricing strong."
