Strong growth expected in agricultural exports

8 June 2004

Strong growth expected in agricultural exports

New Zealand can expect to see a big increase in the value of our agricultural exports over the next three years along with a slowly depreciating dollar, according to the latest MAF Situation and Outlook for New Zealand Agriculture and Forestry.

The Situation and Outlook report says the value of New Zealand’s pastoral agriculture, horticulture and forestry is expected to increase by 20 percent to $20.2-billion to the year ending 2006/07.

The largest contributors to this increase will be dairy – up 25 percent to $7.59-billion due to higher volumes and prices, along with forestry – up 41 percent to $3.89-billion, largely due to increased lumber volumes and prices.

Wool export value is projected to increase by four percent due to higher prices while total horticultural export value is projected to rise by around 30 percent, mainly driven by a 300 percent increase in wine volume being exported.

Meat export value is projected to increase by one percent, as higher prices for lamb and beef are offset by lower beef volumes.

The Situation and Outlook report says the agricultural sector’s contribution to GDP (at farmgate) will rise by 0.4 percent over the outlook period to 2006/07 – from $7.54-billion to $7.57-billion.

It says the exchange rate outlook continues to be dominated by the strength of the New Zealand dollar against the currencies of our major trading partners, particularly the US dollar.

However the New Zealand dollar is assumed to have peaked in the March quarter of this year and will slowly depreciate over the next three years.

While there is likely to be an overall 20 percent increase in agricultural export earnings, the outlook for prices within the sector is variable.

Dairy product prices are projected to generally rise, with the exception of butter, and so are prices for venison, velvet, apples and wine.

However beef, lamb, wool and kiwifruit prices are projected to fall in 2004/05 and then recover. Milksolids prices are also projected to fall to 2005/06 and then recover.

Wheat and pig meat prices are expected to fall.

For most products, the quantities produced are projected to generally increase over the outlook period to 2006/07. The main exceptions to this are beef, velvet and venison, where production is expected to fall.

ENDS

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