The update shows there has been strong pastoral production so far in the 2012/13 season.
“This is partly due to favourable climatic conditions during the previous season, which left breeding stock in good condition, and also ongoing expansion of the dairy herd,” MPI Sector Policy manager of economic information and analysis Chris Jones said.
However, MPI reports the continuing economic slowdown, particularly in the traditional markets of the European Union, is causing weaker demand for some New Zealand products.
Lower lamb prices are expected to reduce export earnings in 2013, whereas beef prices are expected to remain firm over the next two years.
In other commodities, the report forecasts international dairy prices will recover over the remainder of the 2012/13 season, while horticultural exports are expected to be on track to reach $3.5 billion in export earnings in the year to March 2013 and the forestry sector will remain squeezed over the next few years.
As a result, total primary sector export revenue for the year to June 2013 is forecast to be about $27.5 billion, down 5% on the previous year’s income.