Primary sector still on target for record income

14 December 2012

Primary sector still on target for record income

The primary sector is still on target for record export income this year, a Ministry of Agriculture and Forestry report shows.

The outlook for New Zealand’s agriculture, forestry and seafood sectors, while still strong, has weakened slightly since the release of the annual /Situation and Outlook for New Zealand Agriculture and Forestry/ (SONZAF) report in June.

This is a result of continuing challenges in some overseas economies, causing a mark-down of export revenue expectations for dairy, forestry, meat and wool of $930 million or 3.5 percent for the year to June 2012.

MAF has released a half-year update which shows New Zealand climatic conditions in spring 2011 were favourable for milk production and lambing. MAF expects overall pastoral production for the 2011/12 season to be above average.

Prices for pastoral agriculture and seafood have generally remained at historically high levels during the past half-year, despite the deteriorating global economy and high exchange rates.

Emerging markets for food and other primary products continue to grow, but the outlook is for weaker growth in many advanced economies such as the European Union.

The dairy sector faces a squeeze between increased supply from other major exporting countries and slowing demand from major importers such as China. However, the sector’s expected total earnings, at $13.6 billion for the year to end of June 2012, will still be the highest to date.

The lamb schedule price for the year to September 2011 was the highest in inflation-adjusted terms since 1977, due to reduced supply on global markets. Export prices are expected to weaken as global supply increases over the next two years.

Log prices in the key China market have come back further than expected as a consequence of slowing construction activity. Russia is required to change its log export tax as it prepares to join the World Trade Organisation and this could increase competitive pressure for New Zealand in China.

New aquaculture legislation and an increased hoki catch allowance have helped position New Zealand’s seafood industry for continuing growth.

The update shows that wild capture fisheries production was up 2.4 percent to 442,000 tonnes in the year to 30 September 2011.

In the kiwifruit industry the virulent Psa infection is having a severe impact on the premium Gold variety, according to MAF analysts.

Loss of vines since November 2010 could take production of Gold kiwifruit from 30 million trays in 2011 to 20 or even 10 million trays in the 2012 season.

For more information, go to the full half-year report in the Publications section of the MAF website.

ENDS

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