Strong outlook for primary sector exports
The Ministry for Primary Industries (MPI) expects meat and wool, horticulture and forestry export revenues will support New Zealand's primary sector export growth to 2017, and help offset the recent year's fall in the dairy sector.
The signs across the primary sector are encouraging with New Zealand's primary sector export revenue expected to increase to $37.6 billion in the year ending June 2016, up $1.9 billion from the year ended June 2015, according to the Ministry for Primary Industries updated Situation and Outlook for Primary Industries (SOPI). The December update incorporates changes to export volumes and currency movements from MPI's previous June 2015 SOPI publication.
The meat and wool sector is expected to continue its strong growth, with a forecast revenue increase of $910 million to June 2016 (or 10% from June 2015 actual figures) due to strong demand for beef exports from the United States. New Zealand will meet its allowable beef export quota to the USA this season for the first time since 2004. Chinese demand for wool also remains strong.
Milk production is expected to be down 7% this season compared to last, due to current dairy prices. However, prices are expected to rebound by late 2016, early 2017, as current dairy stocks are worked through and demand levels increase.
The forestry sector is forecast to grow $613 million, even though Chinese demand for logs is reduced due to a continuing slowdown in the Chinese construction sector. MPI expects an increase in exported timber volumes to help offset this reduction in log exports.
The seafood sector will be supported by favourable climatic conditions and the opening of 2 new salmon farms which will contribute to an expected $200 million export revenue increase in this area.
Pipfruit and wine revenues continue to grow as kiwifruit yields reach record levels and wine suppliers utilise past season vintages to support increasing consumer demand for New Zealand products. The horticulture sector outlook is strong, with an expected $700 million export revenue increase forecast in the June 2016 year for this sector.
Over the publication outlook period (2016 and 2017) the New Zealand to United States Dollar exchange rate is forecast to track lower than was projected in MPI's June 2015 SOPI publication increasing New Zealand's expected export revenue figures.
The conclusion of key trade deals, such as the Trans-Pacific Partnership (TPP), will continue to support New Zealand's primary sectors towards meeting the Government's export and business growth targets with the export outlook for New Zealand continuing to be positive.
Download the SOPI December 2015 update [PDF, 3.3 MB]