MAF report shows lower returns for growers but continuing optimism

26 July 2010

Returns for many crops fell in 2009 but New Zealand growers remain cautiously optimistic about their future profitability a Ministry of Agriculture and Forestry report shows.

The annual horticulture and arable farm monitoring reports provide an overview of the economic performance of orchards, vineyards and arable farms throughout New Zealand, based on data from the previous year and growers’ views of the coming year.

The report shows growers are cautiously optimistic about the year ahead as the world continues to recover from the global economic crisis, despite at best mixed outcomes for the sectors in 2009.

MAF Senior Policy Analyst Annette Carey says growers are budgeting for steady or improving profitability in 2010/11, although for some the outlook is more uncertain.

“They are focused on keeping tight constraints on expenses and continuing efforts to improve productivity, product quality and targeting marketing strategies that extract premiums in the marketplace,” she said.

A weaker New Zealand dollar in early 2009 provided a buffer from weaker consumer demand as a result of the global economic crisis. However, it strengthened considerably over the course of the year and this significantly impacted on grower returns.

As reported in the Situation and Outlook for New Zealand Agriculture and Forestry, the depressed markets in Europe affected margins for pipfruit, while Asian markets generally performed well.

“The recession in Europe eroded the premium for higher priced apple varieties, including organic apples,” said Ms Carey. “Depending on their variety mix, some pipfruit growers would have struggled to cover costs last year.

“On the other hand, Asian markets maintained strong demand for kiwifruit and pipfruit in 2009, with kiwifruit passing the $1b export mark.

“Profitability was low for many wine grape growers as grape prices fell significantly as supply exceeded demand, particularly for sauvignon blanc,” said Ms Carey.

Favourable growing conditions led to good arable yields with the report showing an increased operating surplus in 2009/10 but this is reflected in increased crop on hand, rather than cash in the bank.

The farm monitoring reports for horticulture and arable are on the MAF website at: http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/farm-monitoring/

 

Last Updated: 28 July 2010

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