NZ growers show resilience despite economic challenges

6 October 2008

New Zealand growers are showing their resilience and flexibility despite changing economic conditions, says a report launched by the Ministry of Agriculture and Forestry (MAF) today.

The Horticulture and Arable Monitoring Report 2008 shows that despite increasing costs many growers in the horticulture and arable sectors had an improved financial outcome for the 2008 harvest season.

Lower global supplies, due to unfavourable weather conditions and other factors, resulted in higher prices for apples, blackcurrants, lemons, cereal grains, and honey. High yields and increased producing areas for avocadoes, honey and Marlborough wine grapes delivered record production levels for these crops in 2008.

Paul Stocks, Deputy Director General Policy at MAF, said growers have responded well to the challenges.

"Last season was challenging for New Zealand growers with rising expenses and the continued strength of the New Zealand dollar. Despite these factors, many sectors have demonstrated their resilience and ability to respond flexibly to market conditions," said Mr Stocks.

While the majority of fruit and arable crop growers had an improved outcome, the report shows growers of most vegetable crops experienced a poorer financial outcome due to increasing costs that could not be matched by greater yields or prices.

"Despite the improvement in financial performance for the 2008 season, the short-term profitability of some crop sectors remains challenged, with businesses struggling to generate adequate funds for reinvestment. Growers on small-scale properties in particular are more and more reliant on off-farm income and investments," said Mr Stocks.

The report finds that growers expect further cost increases in the year ahead, and are seeking to manage this by maximising income through improved yields and quality and by the more efficient use of inputs. In sectors where good profit levels were achieved in 2008 - such as wine grape production in the Marlborough region, and arable cropping - growers are using the extra funds to improve the efficiency of their businesses and consolidate future income.

"While considerable challenges face the sectors, there are also many opportunities. World demand for food products with assurances of safety and environmental sustainability is increasing, and the decline in world cereal stocks and the expansion of the dairy sector in New Zealand are providing growers of vegetable and arable crops, in particular, with opportunities to increase income," Mr Stocks said.

The Horticulture and Arable Monitoring Report is compiled by MAF annually and provides an overview of the economic performance of orchards, vineyards and arable farms throughout New Zealand for the annual growing season. Forecasts for the 2008 season in the report are based on growers’ views collected in May this year.

A fact sheet on the Horticulture and Arable Monitoring Report 2008 is available here. Copies of the report are available on the MAF website at http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/farm-monitoring/

ENDS

Media contact:

Kassy Hayden | MAF Communications
Phone: 64-4- 894 0171 | Mobile: 021-1484341 | Email: kassy.hayden@maf.govt.nz

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