$5b increase seen for primary exports

KATIE KENNY
Last updated 12:00 19/02/2014

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Primary sector exports "continue to boom" and prove their worth as the spine of the country's economy, Primary Industries Nathan Guy said today.

Agriculture, forestry and fishing exports are expected to increase by $4.9 billion to $36.4b for the year to June 30, he said, as he released the latest Situation and Outlook for Primary Industries Forecast.

"This is more economic good news, and shows how the primary industries continue to underpin the New Zealand economy," Guy said.

The steepest predicted rise would be from the dairy sector, with an increase of $2.7b (19.5 per cent), making the total value $16.7b.

Meat exports are predicted to increase by $1.2b (22.1 per cent), to a total value of $6.6b.

"Growth in these sectors is being helped by rapidly growing demand in emerging markets and supply constraints in our major competitors," the minister said.

Figures show the global demand for sheep meat has risen as China consumes more and demand is recovering in Britain.

Guy said the outlook was "another big step" towards the Government's goal of doubling primary-sector exports by 2025.

"It will be important to build on this growth through the primary growth partnership, encouraging irrigation and water storage, progressing free trade deals, new roads and RMA [Resource Management Act] reform," he said.

THE PREDICTIONS

Dairy: A forecast $2.7 billion increase to the dairy sector brings its total forecast to $16.7 billion. Growing demand for dairy products in emerging markets, combined with limited milk supply from other exporters (particularly the United States and Europe) means more gains for New Zealanders. The ongoing demand growth will offset price impact as supply elsewhere picks up again. Asian countries now account for 57 per cent of the global trade in milk powders, and 20 per cent of cheese imports.

Meat: Lower beef production in the United States and Europe, as well as higher than expected prices for both beef and lamb, mean sector revenues are expected to rise $1.2 billion above the original forecast to reach $6.6 billion. Today’s report shows this is mainly due to increasing international prices and volumes, particularly to China.

Forestry: Predicted uplift of $820 million to a total of $5.1 billion is primarily due to higher log export prices, which has in turn led to increased harvest rates. China is the leading market for New Zealand log exports (New Zealand last year overtook Russia to become the major softwood exporter to China), and limited supply from other major exporters will keep prices high.

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Seafood: Although export volumes are predicted to decline by 8000 tonnes from the SOPI 2013 forecast, this year’s report predicts price increases and thus overall earnings for the sector. An increase in Total Allowable Commercial Catch for hoki should lessen the impact of decline in wild capture fisheries volumes.

Horticulture: Forecasts in horticulture are close to the original values, with a $109 million increase from $3.2 billion to $3.3 billion. The main production shift in this sector relates to gold kiwifruit. Psa disease is expected to halve export volumes for the current season. As of November 2013, 77 per cent of kiwifruit orchards are known to have Psa, up from 68 per cent a year ago. However, the fruit should recover in the next few years, and in the meantime the demand for green kiwifruit has lifted.

- Fairfax Media

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