MAF Report Projects Steady Outlook

24 May 2002

MAF Report Projects Steady Outlook for Land-Based Sectors

The Ministry of Agriculture and Forestry's latest Situation and Outlook update paints a picture of a past year that's as good as it gets for the land based sectors.

That's according to Senior Policy Analyst, Rod Forbes, whose team prepared the Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) May 2002 update. He says in the year to March 2002 returns for total pastoral exports were up 17 percent to $13.78 billion and horticultural exports were up nine percent to $2.2 billion.

"These rises were largely due to the lower value of the New Zealand dollar, generally favourable product prices and reasonably good climatic conditions," explains Mr Forbes.

Forestry exports, however, suffered from the downturn in main markets and subsequent price falls - resulting in a slight decline in export returns to $3.58 billion.

While exports have grown significantly over the past two years, Mr Forbes says a slight drop off in returns is expected next year for pastoral and horticultural exports, due to an appreciating New Zealand dollar (NZD), and weaker international prices for dairy products. For forestry a slight rise is anticipated due to increasing export volumes.

If the recent sharp rise in the NZD is sustained over the year to March 2003, export and producer prices will be lower than forecast in the document.

MAF Policy provided the forecasts and projections for major pastoral, horticultural and forestry export products to Treasury as input for Budget 2002. Some adjustments to the initial forecasts, which were prepared last month, were made after Fonterra Co-operative Group Limited (Fonterra) announced a significantly lower outlook for milksolids payouts in 2002/03. Also, provisional exports for the year ended March 2002, which were not available at the time the original forecasts were prepared, were later incorporated.

Over the next five years, export volume increases are expected from dairy and forestry products, in the main, with volume increases also expected from wine and venison, which are significant in their own right. In summary, the SONZA projects the following:

· Pastoral exports: By year ending March 2007, export value is projected at $14.49 billion.

· Horticultural exports: By year ending March 2007, horticultural export value is projected at $2.48 billion, due to rising wine export volumes.

· Forestry exports: By year ending March 2007, export value is projected at $4.06 billion, due to rising export volumes.

· Agriculture GDP: For the year ending March 2007, contribution to GDP is projected at $8.20 billion.

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