Strong outlook for primary sectors

There’s been much talk about the dairy sector in recent days.

Last week, our largest dairy company Fonterra announced a new reduced forecast payout for farmers. This isn’t particularly surprising as it reflects the ongoing volatility in the international dairy price, but clearly it will have a significant impact on the dairy industry.

Times will be a bit tougher for dairy farmers over the next few months and it will have a flow-on impact in regional communities.

However, this volatility in dairy prices is expected to be short-term. The medium to long-term outlook for our dairy sector, and indeed all primary sectors, is very positive, and expected to grow by 17 per cent to more than $41 billion over the next four years.

Because of hard-working New Zealanders and this National-led Government’s responsible economic management, we now have a stronger, more diverse economy.

Impressive growth in the meat, horticulture and seafood sectors will help to offset any decrease in the dairy sector, and they have very positive outlooks.
For example, beef prices for New Zealand farmers have risen to record highs and horticulture exports are now worth over $4 billion. The New Zealand dollar is also around 25 cents lower against the US dollar than this time last year which is helping all exporters, and interest rates are low.

Other sectors of the economy are also performing well, including tourism, ICT, international education, and the wine industry.

Dairy farmers are resourceful and they know better than anyone that it’s a cyclical business, and always has been.

The Government is keeping a close eye on the situation and, as always, we’re working to support rural New Zealand. As part of this we’ve provided $500,000 extra funding for rural mental health support.

Watch the video of my question in the house on the dairy sector yesterday here.

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