NEW ZEALAND – Broad-based, steady and sustainable demand for many agricultural commodities is expected to underpin New Zealand’s export income for the medium term, a Ministry of Agriculture and Forestry report shows.
The annual Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) shows New Zealand exporters are receiving historically high prices in foreign currency terms for beef, dairy, lamb, logs, timber and wool products, with the returns expected to continue into the medium-term.
MAF Director-General Wayne McNee says the steady pick-up in fortunes for the primary sectors is notable for its breadth and consistency.
“Adverse climatic events in New Zealand and other producing areas have had an effect in driving up some prices.
“But the majority of our primary sectors should be able to look forward to a period of sustained growth, which will enable recovery of balance sheets, reinvestment and some breathing space after a tough few years.
“As with all forecasts SONZAF is subject to unforeseeable factors such as extreme weather events and unexpected currency movements, but what it shows is that many of the sectors have their fundamentals in order and are well positioned to take advantage of strong international demand for our products.”
The relatively strong New Zealand dollar reduces the gains passed through to New Zealand farmers, growers and foresters. On the other hand, it also reduces the effective cost of imported rural inputs such as fertiliser.
Beef: New Zealand beef production is down about nine per cent this season as a result of reduced cattle numbers and lower carcase weights due to adverse weather.
Prices for New Zealand manufacturing beef in the key United States market reached historical highs during the 2010/11 season, due to reduced supply and strong demand.
In the medium term international beef supply is expected to increase, but still remain slightly behind growth in demand, underpinning higher average prices.
Dairy: Dairy production in the 2010/11 season started below expectations due to widespread spring drought and slowed rate of dairy conversions. However favourable autumn weather lifted milk solids production – continuing after SONZAF went to print – resulting in an estimated four per cent increase. A further four per cent increase in production is now expected in the 2011/12 season.
International dairy prices in the 2010/11 season were up due to strong demand. In the medium term increased supply is expected to moderate this.
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