Positive forecast for New Zealand agriculture and forestry

3 August 2007

The Ministry of Agriculture and Forestry’s (MAF) annual forecasts for the primary sectors predict generally positive times ahead for the primary sectors.

The Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) 2007 report forecasts international commodity prices will be stronger over the next four years than they have for the past four years.

“As a result of this forecast, we expect positive outlooks for New Zealand agriculture and forestry prices and incomes,” says MAF Director-General Murray Sherwin.

The SONZAF report predicts dairy payouts of between $5 and $5.50 per kilogram of milk solids for the next four dairy seasons, based on the expectation that international dairy prices will remain higher than prices in recent years but not as high as prices at June 2007.

Farm-gate prices for beef are stronger this year and have benefited from strong returns in South Korea and Japan. While international prices for New Zealand beef are expected to soften over the forecast period, returns to farmers are expected to improve as the New Zealand dollar depreciates.

International prices for major horticulture crops have generally been strong enough to alleviate the effect of the high exchange rate. New Zealand horticulture producers’ focus on maintaining and improving already high product quality is expected to sustain international prices for New Zealand produce over the next four years.

Log prices have risen in recent months, benefiting forestry owners who have suffered over recent years. This is expected to be the beginning of a sustained rise in log prices. Not all is positive in the forestry sector though, with the report showing several timber mills closing in recent months, caught in the combined effects of the high exchange rate, a weak US timber market, and the rising log prices. Recovery is expected to be slow, with the US housing market likely to remain depressed for some time.

Also on the down side, the report reflects a second slaughter season of poor lamb schedule prices has resulted from static international prices and a high dollar. The outlook for lamb may, however, become more positive, with breeding ewe numbers declining in Europe.

Murray Sherwin says this year’s SONZAF represents a step forward in MAF’s ability to present what is happening in New Zealand’s primary sectors and forecast trends in the next five years.

As well as detailed forecasts the report contains an overview of the primary sector and articles on some of the major issues facing the sectors, including sustainable development, productivity and nanotechnology.

“It is no good just focusing on the numbers if you do not have some understanding of the context,” says Murray Sherwin. “As such we have decided to reorganise SONZAF and present some of the bigger issues first before diving into the actual performance of different industries.

“The agricultural, horticultural and forestry industries are extremely important to New Zealand. They provide the core of our economy and determine much of our land use.”

Mr Sherwin says MAF is committed to leading the development of policy that will ensure New Zealand primary industries thrive. “SONZAF provides an authoritative account of the current state and likely outlook of the primary industries.”

For further information, contact:

Helen Keyes, Senior Communications Adviser, Ph. 04 894 0161 or 029 894 0161

Contact MPI

for general enquiries phone

0800 00 83 33