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Embargoed until 1 August 2006
The Ministry of Agriculture and Forestry (MAF) is predicting only modest
growth from the primary sector over coming months, despite a surge in
confidence due to the falling New Zealand dollar.
MAF today released its latest forecasts for the dairy, meat and wool,
forestry, kiwifruit, apples and wine industries for 2006 to 2010.
The Ministry's Situation and Outlook for New Zealand Agriculture and
Forestry (SONZAF) report shows that the sector's confidence has turned
around since the beginning of 2006 and there are greater expectations of
profitability. The confidence boost has been driven largely by the depreciating
New Zealand dollar.
The MAF report supports this confidence by forecasting that export revenues
in the sector will grow from $15.7 billion in the year ending March 2006 to
$17.9 billion in the year ending March 2007. By 2010, exports are forecast to
reach $20.5 billion, up $4.8 billion on 2006.
However, MAF Manager of Monitoring and Evaluation Peter Gardiner warned that
increasing costs would affect profitability, and that income growth in the
sector was only expected to be "modest" between April 2006 and
He said energy costs, which account for around 20 percent of farm production
costs, were likely to remain high.
"The weakening New Zealand dollar will raise the cost of oil, fuelling
rising costs of fertiliser, transport and a range of other business expenses.
Costs of imported goods will also increase, affecting primary producers and
their associated downstream industries," he said.
In addition, the report shows that international prices for meat and dairy
products are in retreat and are expected to reach a low point in 2007. The
price of horticultural and forestry products is improving, and is expected to
continue to do so, but these industries are having difficulty attracting
workers and labour costs are rising.
Peter Gardiner said international venison and wool prices were expected to
recover from the relatively low levels in 2005. But rising costs would continue
to affect profitability.
The dairy, meat and wool, forestry, kiwifruit, apples and wine industries
make up about half of New Zealand's total merchandise trade. Total
agricultural, horticultural and forestry exports represent more than 60 percent
of total merchandise trade.
For further information, please contact:
Peter Gardiner, Manager Monitoring and Evaluation
Innovation and Research Policy
Ph: 04 894 0623 or 029 8940623
Or Lesley Patston, Senior Communications Adviser
Ph. 04 894 0163 or 029 894 0163
The full SONZAF report is available on the MAF website