Rural Productivity Highlighted

New Zealand Government Media Release

8 January 2001

Agricultural sector revenue is projected to increase by 24 per cent over the next five years, Agriculture Minister Jim Sutton said today.

He released the Ministry of Agriculture and Forestry forecasts and projections for major agricultural, horticultural, and forestry export products which The Treasury used as input for the December Economic and Fiscal Update.

The December 2000 Situation and Outlook for New Zealand Agriculture and Forestry projects agricultural sector revenue rising from $12.10 billion to $15.06 billion between the year ended March 2000 and the year ending March 2005. That mainly reflects growth from dairy, cattle, fruit and agricultural services.

Over the same time, contribution to gross domestic product is projected to rise 22 per cent - from $5.95 billion to $7.29 billion.

Mr Sutton said the projections highlighted the tremendous productivity of New Zealand's rural sector.

"Rural communities have been under stress for several years, but despite that, they still produce enormous amounts of this country's export earnings. The rural community is the backbone of the New Zealand economy."

The projections estimate that between the year ended March 2000 and the year ending March 2005, overall pastoral export earnings are projected to rise 41 per cent, from $9.38 billion to $13.0 billion. That breaks down as:

  • meat export earnings are projected to rise 23 per cent due to rising prices;
  • wool export earnings are to rise 24 per cent due to rising prices;
  • dairy to rise 39 per cent, due to both volume and price increases; and
  • other pastoral products to rise 35 per cent due to rising prices.

During the same time period, overall horticultural export earnings are projected to rise 27 per cent from $1.76 billion to $2.23 billion. That breaks down as:

  • kiwifruit earnings are projected to rise 13 per cent due to rising volumes;
  • apples to fall 11 per cent, due to both volume and price falls;
  • other fresh fruit to rise 42 per cent;
  • fresh vegetables to rise 14 per cent;
  • processed fruit to rise 116 per cent;
  • processed vegetables to remain static; and
  • ornamentals to rise by 11 per cent.

Forestry is also tipped to do well, with increasing markets for New Zealand wood and timber products.

Mr Sutton said the December 2000 SONZAF report confirmed the vital importance of agriculture to the New Zealand economy.

"New Zealand agriculture is at the cutting edge, with farmers quick to adopt new technology and new ways of doing things in order to make their products the best in the world."

The projections assume an environment of low exchange rates and low inflation rates, as well as moderate interest rates.

The projections say agricultural exports are still affected by the Russian fiscal crisis. As well as being a big market for New Zealand hides which had been processed into leather jackets in Turkey, Russia is a sink market for cheaper cuts of meat, especially pork.

However, important markets for New Zealand products in Asia have recovered quicker than expected from the Asian financial crisis, which was boosting exports.

The projections have not taken the varroa bee mite infestation into account, saying there

"To date, the most obvious effect is an increase in charge out rates for pollination hives in the Bay of Plenty. A shortage of pollination hives for horticulture is unlikely, but charge out rates are likely to continue to increase over the medium term as varroa mite spreads from the upper North Island."

The report says the season ended June 2000 was much improved, compared to the previous two years of droughts.

For more information, contact:

Cathie Bell on 04 4719855 or 025 998467

Contact MPI

for general enquiries phone

0800 00 83 33