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17 December 2003
MAF's latest Situation and Outlook for New Zealand Agriculture and Forestry
(SONZAF) reports reveal a mixed outlook for international prices, with rising
export values for agricultural and forestry products over the medium term, but a
reduction in agriculture's contribution to New Zealand's GDP.
The overview report says that the high New Zealand dollar will continue to
have an impact on commodity prices through the outlook period. The past year saw
many of New Zealand's agricultural and forestry products suffer from both lower
international prices and the stronger New Zealand dollar. Drought also affected
areas of the south-western North Island.
This is in comparison to the 2001/02 season that experienced a weaker New
Zealand dollar, generally favourable international prices for key products, and
good climatic conditions. MAF forecast at the time that the effects of this
would not last.
The SONZAF reports say that over the next two to four years dairy product,
lumber and panel international prices are projected to rise while beef, pulp and
paper prices are likely to rise to 2004-05 before falling.
Lamb and mutton prices are projected to fall while log prices are projected
to remain relatively static.
However, the New Zealand dollar's persistent strength is projected to
moderate the effects of any international price rises on the prices that New
Zealand's producers and processors receive.
The main export trends over the outlook period from March year 2003 to March
year 2004 are:
The reports say the contribution of the agriculture sector to New Zealand's
Gross Domestic Product is projected to fall by two percent over the outlook
Agriculture's contribution to GDP for the year to March 2003 has been
provisionally estimated at $8.08 billion. MAF projects this will fall to $7.92
billion in the year to March 2007 as farmers respond to a five percent drop in
total income by reducing their on-farm expenditure by eight percent.
The reports say that dairy farming's contribution agricultural sector revenue
is likely to rise by 20 percent over the outlook period - from $4.71 billion in
the year to March 2003 to $5.65 billion in the year to March 2007.
However, this will be offset by falling revenue from beef cattle, sheep meat
Advances in science and technology are transforming the land-based primary
industries and will continue to be a catalyst for the sectors to maintain their
competitive edge as unsubsidised low-cost producers.
This is highlighted by the fact that New Zealand's biggest private sector
investor in research and development is the Fonterra Co-operative Dairy Group.
MAF says the country's primary sector producers and processors continue to be
among the country's leading adopters of new technology and scientific
For more information contact:
Dr Paul Reynolds, Assistant Director General,
MAF Policy, Tel 04-474-4175 or go to website http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/sonzaf/index.htm