Wednesday, May 22, 2024

Sector booms despite gloom

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Exports of primary sector goods are booming for the third year in a row.
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The latest Situation and Outlook for Primary Industries report by the Primary Industries Ministery shows total farm, fishing and forestry exports for the year ended June 30 reached a record $46.4 billion.

That is an 8.7% rise for the year and it’s accelerating. The 2021 forecast is up by $810 million despite increasing financial and environmental pressures facing the sector.

Dairy at $18.1b leads, followed by meat and wool at $10.1b, forestry $6.9b, horticulture $6.1b and seafood $1.9b. 

The 2018-19 dairy was the second-highest on record with 1865 million tonnes of milksolids produced. In 2014 MS hit 1890m.

The forecast reflects strong production seasons for both the livestock and horticulture sectors, record log prices and harvest volumes and a weak NZ dollar.

Agriculture Minister Damien O’Connor said the results are outstanding. 

“It’s a very positive outlook into the future, especially at a time when we need to be generating more income for the primary sectors to cover the inevitable increasing costs of production.

“It should encourage farmers to believe in what they are doing and the positive returns that they can get for their efforts.”

Total dairy export revenue was up 8.7%. That’s a $1.47b increase, which is just staggering and the sector appears to be set up for another favourable season, he said.

“I think it’s really important dairy farmers take a step back and look at the wider picture. 

“There is steady demand for our product and we are generally at the high-end value of the market for most of our products and ingredients.

“The volume of production will eventually flatten out”, O’Connor warned. 

“So that’s why we must keep focusing on the value component of everything that we produce.”

Export revenue for this year is forecast to drop 0.5% to $46.2b.

Prices are expected to remain high for most products but lower volumes are forecast in most sectors.

Dairy and red meat volumes are expected to drop after benefiting from above-average pasture growth last season and lower log prices are expected to drive a decrease in forestry production and exports, MPI said.

But horticulture continues to consistently grow in both value and volume in sectors like apples and kiwifruit.

“For the year ending June 2020 horticulture revenue is forecast to rise 3.8%.”

Meat prices remain near record highs with strong international demand, O’Connor said.

“Our nation’s farmers and growers produce some of the highest quality food in the world and the world knows it. They are bringing home record export returns and that’s something for them to be really proud of.”

But Brexit and trade tensions between the United States and China continue to be a concern for global trade.

“I think you’d have to be a genius to predict what might happen in the United Kingdom over the next six months,” O’Connor said. 

“I don’t think Boris Johnson or the wider UK economy have got a handle on what no-deal or a deal mean for their relationships with other countries. They really are adrift at sea when it comes to trade relationships.

“We just have to wait in the hope that they get their act together and sort out the mess because their economy and their suppliers need some certainty.”

O’Connor remains optimistic about the Government’s trade agenda.

“We’re working hard on opening up the world’s largest economies to our primary exports,” he said.

“Last week I was in Thailand attending a Regional Comprehensive Economic Partnership ministerial meeting as negotiations enter the final stages.”

When concluded, the RCEP Agreement would anchor New Zealand in a regional deal covering 16 countries and take more than half our total exports. 

It would also provide NZ with a free-trade relationship with India.

“Trade negotiations with the European Union and updating our free-trade agreement with China are also priorities,” he said. 

“Outside of our trade agreements the Government is also working with NZ exporters to help resolve specific barriers to trade that they might face in overseas markets.”

O’Connor said the RCEP is expected to be finalised by November.

How much is farming worth to the nation?

Income for 2018-19 was $46.4 billion, up 8.7%.

Dairy worth, $18.1b, up $1.47b

Meat and wool, $10.1b

Forestry, $6.9b

Horticulture, $6.1b

Next year

Total $46.1b

Dairy, $18.6b

Meat and wool, $10.07b

Forestry, $5.8b

Horticulture, $6.3b

2021

Total $47.4b

Dairy, $18.9b

Meat and wool, $10.1b

Forestry, $6.3b

Horticulture, $6.5b

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Full story on Primary Industries Ministry Situation and Outlook for Primary Industries 

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