Primary sector export revenue for the year to June next year
is forecast to be down about 5% on the previous year's
income, as deteriorating global economic conditions
significantly impact on returns.
A half-year update to the annual Situation and Outlook for
Primary industries report, released this week by the Ministry
for Primary Industries, showed there had been strong pastoral
production so far in the 2012-13 season.
However, the continuing economic slowdown, particularly in
the traditional markets of the European Union, was causing
weaker demand for some products, such as lamb. The
strengthening of the New Zealand dollar against most major
trading currencies in recent months was having a dampening
effect on farm-gate returns for primary produce.
International dairy prices were expected to recover over the
remainder of the 2012-13 season and beyond.
New Zealand's dairy export revenue was expected to fall by
8.1% to $12.6 billion in the year to June 2013, compared with
the previous year.
International dairy prices had recovered 24% from their
recent low in May this year, due to market expectations of a
reduction in milk supply from the European Union and the
The domestic farm-gate milk price for the year ended May 31,
2013 was expected to average $5.54 per kg of milk solids,
down 42c on last season's price, due to the stronger New
Zealand dollar eroding the expected gain in international
Lower lamb prices were expected, resulting from weaker demand
in key European markets. Lamb export revenue was expected to
decrease 17% to $1.91 billion in the year ended June 2013.
Increased lamb exports from Australia and weak economic
conditions in global lamb markets were expected to keep
prices ''subdued'' over the next two years.
Wool export revenue was expected to decrease 23% to $580
million, due to lower export prices. Weaker demand for
finished wool products in developed countries meant wool
export prices in the September 2012 quarter declined 41% from
their peak in the December, 2011 quarter, when prices were
high due to limited global supply.
Beef prices were expected to remain firm over the next two
years, following a major drought in North America.
The forestry sector would remain squeezed for the next few
years, due to low demand from major export markets.
Export revenue from all horticultural products was on track
to reach $3.5 billion in the year to March 2013, with higher
in-market prices expected to offset lower kiwifruit and wine
exports and the stronger New Zealand dollar.
Forecast export volume for wine in the year ending June 2013
remained at 155 million litres, representing a 13% drop on
the previous year due to the smaller grape harvest in 2012.
The decreased export volume was forecast to raise the average
price per litre by 15% to $7.60.