NZ's primary industry exports forecast to grow by 9.3%

The Ministry for Primary Industries (MPI) predicts that New Zealand’s primary industry exports will grow by 9.3% over the coming year, according to the latest Situation and Outlook for Primary Industries (SOPI) report.

The SOPI report provides an insight into the major primary sectors and uses the data to forecast what the next four years will bring. The positive predictions come as a result of a successful end to last year’s exports in June 2017 in which the country reached NZ$38.1 billion, 2.4% higher than 2016. Jarred Mair, director of Sector Policy for the MPI, stated it also beat their expectations as it was “[NZ]$7 million higher than we previously estimated”.

“Dairy prices began recovering in the past year, which boosted exports, despite weather reducing production. The forestry sector also made a strong contribution to export growth for the second consecutive year, driven by record demand for log exports to China. This offset a decline in meat and wool exports,” the report stated.

Dairy

MPI anticipates these exports to rise 9.3% by June 2018, reaching NZ$41.6 billion, due to dairy prices remaining strong and most sectors returning to normal productivity levels.

This is despite last year’s poor weather conditions which caused a 0.6% decrease in milk solids production on farm. The levels began to recover throughout the year and, assuming the climatic conditions remain good, the report suggests this will continue into 2018, rising by 2.2%.

Dairy exports expanded by NZ$1.3 billion last year, and it is forecast to rise over 18% to NZ$17.3 billion by June 2018.

Butter exports to China have also increased from NZ$355 million in 2016 to NZ$443 million in 2017 due to rising demands for ingredients to create baked goods in major cities.

Meat and wool

However, there was a 9.2% decline in meat and wool exports in the year ending in June 2017.

Low wool prices are expected to continue in the coming year due to a large reduction in demand, but export revenue is predicted to expand for meat as production volumes stabilise.

Although fewer cows were culled last year compared to the two years prior, beef export prices are forecast to remain relatively strong. Lamb prices, however, have increased as a result of lower lamb production in Australia and New Zealand.

The report also looks at forestry, horticulture, seafood, arable and ‘other’, which includes honey and beverages. Despite last year’s decline, revenue is predicted to expand 1.7% in 2018.

“These trends are projected to continue into 2019, resulting in a forecast of [NZ]$42.4 billion in the year ended June 2019 (up 1.8%). This is despite a New Zealand dollar that has strengthened over the past quarter and that is now forecast at higher levels over the outlook period,” Mair said.