Stable economic outlook across the primary sector
The Ministry for Primary Industries (MPI) says the outlook across the primary sector is stable for the current year, as the dairy industry begins to rebound and growth continues for the horticulture and forestry sectors. This is offset by a forecast decline in meat and wool. Total export revenue is forecast to be $36.7 billion for the year to June 2017, down $0.3 billion from the previous year.
MPI Director of Sector Policy, Jarred Mair, says the latest Situation and Outlook for Primary Industries (SOPI) shows that over the next few years, New Zealand’s primary sector export earnings are forecast to increase by an average of 5.4% per year, reaching $47.9 billion by the year ended June 2021.
"This highlights again the strength of our primary industries, and the benefits of our diversified primary sector. However, lower economic growth in trade partners creates headwinds for New Zealand primary industry export growth", he says.
Dairy export revenue is forecast to rise 3% in 2017, but is expected to increase 24% to $17 billion in 2018 as milk production is forecast to return to previous levels after 2 years of decline. In addition, recent increases in global dairy prices are forecast to be sustained into 2018.
"It's very pleasing to see the global dairy market rebounding after a difficult few years. The average payout for dairy farmers is now expected to be above break-even for most, and there is also continued strong growth for sectors like horticulture, forestry and arable", says Mr Mair.
Meat and wool export revenue is forecast to fall 10.8% in 2017 as beef production volume falls back from peak levels and prices decline as US and Australian production recovers.
Mr Mair says demand from China and an increase in wood available for harvest are expected to help forestry exports reach $5.3 billion in 2017, and exceed $6.0 billion by 2020.
"Expanded plantings are expected to increase future export volumes for wine and apples, while additional Gold3 kiwifruit licences will help drive horticulture export revenue past $6.0 billion by 2020", says Mr Mair.