By Rebecca Howard
June 13 (BusinessDesk) - The government expects primary industry export revenue will rise 7.1 percent to $45.7 billion in the June year, but predicts growth will be flatter in the future.
The lift marks the "second straight year of substantial export growth," said Agriculture Minister Damien O’Connor when he presented the Ministry for Primary Industries’ Situation and Outlook report for June 2019 at Fieldays. Export revenue was $42.7 billion in the prior year, up 11.7 percent.
“Export performance is up nearly $7.5 billion over the last two years. That’s incredibly impressive considering the weakening global economic environment and a rising sense of uncertainty in global markets,” he said.
Primary industries accounted for 80 percent of New Zealand's merchandise exports in the March year and the sector employs 15 percent of the country's total workforce.
Dairy sector export revenues are seen rising 5.7 percent to $17.6 billion in the year to June 30, "supported by strong milk production and sustained global demand," according to the report.
MPI expects that milk production lifted 2.3 percent in the season that just ended. A recovery in global prices, which began in late 2018, will see export revenue growth continue into 2020, supporting relatively strong farmgate milk payouts over the medium term.
Meanwhile, strong red meat prices are forecast to push meat and wool export revenues up 6.4 percent to $10.2 billion in the 12 months to June 30. Lamb export prices and schedule prices are forecast to fall in 2020 but will still remain high.
Prices have been slowly declining from their peak in August 2018, a result of production in Australia recovering from drought to meet growing Chinese demand.
Total export revenue from forestry is seen at $6.9 billion, up 7.8 percent on the year. Log exports are forecast to reach a record $3.8 billion, led by demand from China raising prices and incentivising harvesting.
That will be an increase of 19 percent from 2018, the fourth consecutive year of robust growth. Export growth is expected to be moderate in the 2020 June year, assuming demand from China will stabilise at current levels, MPI said.
Horticulture export revenue is forecast to lift 13.7 percent to $6.1 billion, largely on the back of a strong increase in kiwifruit exports. Seafood exports are tipped to be $1.9 billion versus $1.78 billion a year earlier.
Looking ahead, "because current exceptional price levels are forecast to soften for New Zealand’s lamb exporters, and as volume growth slows in the larger export sectors, we are forecasting export revenues to soften slightly in the year ending June 2020 before gaining moderate momentum over the medium term, supported by the dairy, meat, and horticultural sectors."
It is forecasting export revenue to be $45.65 billion in the year ended June 2020, down 0.1 percent versus this year's forecast. It then ticks up to $46.7 billion in the year ended June 2021 and $47.5 billion the following year.