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Gross agricultural revenue is estimated to rise 2.7 percent to $20 431 million for the year ended 31 March 2010. This is largely due to revenue increases in dairy, value of livestock change, fruit and agricultural services moderated by decreases in cattle and deer.
Interest paid is estimated to have fallen in the year ended 31 March 2010. Consequently, agriculture sector income (a useful indicator of agriculture's overall profitability) is estimated at $3172 million, an increase of 46 percent compared with 2009.
Agriculture sector revenues are forecast to be reasonably strong over the outlook period when compared to the period 2003 to 2007 when revenues averaged $2013 million.
Agriculture sector interest paid fell $897 million (28 percent) in the year to 31 March 2010 after a period of rapid growth. This is the result of falling interest rates and a dramatic slowdown in the rate of growth in agricultural lending. In the year to 31 March 2010, agricultural lending grew at 5 percent, down from growth of 22 percent in the year to March 2009. This slowdown in agricultural lending corresponds with a slowdown in the rural real estate market. Over the year to 31 March 2010, 2202 farms were sold, 51 percent fewer than in the previous year, in which 4517 farms were traded.
In the outlook, agricultural interest paid is expected to increase as interest rates rise and agricultural credit is assumed to grow. The assumption that agricultural lending will grow is particularly uncertain as it hinges on the rural real estate market returning to pre-global financial crisis rates of turnover.
Estimates for 2008 and 2009 have been revised following the release of updated data from Statistics New Zealand. This has resulted in significant revisions when comparing the latest GARE results with those published in the 2009 SONZAF release (Table 2.2) and as such the two tables should not be compared.
It should be noted that MAF has concerns about the robustness of the methodologies currently used to forecast intermediate consumption and interest paid. These will be reviewed and improved prior to the publication of SONZAF 2011.
Table: Gross agricultural revenue and expenditure, years to 31 March 2008-2014