The country's lamb crop could be down 2 million to 24.4
million, the lowest level since 1955. Photo by Beef and
The effect of the drought earlier this year is continuing
to undermine agricultural economic growth, with off-setting
growth elsewhere failing to take up the slack.
However, while the drought's initial impact during the first
half of 2013 might have been more negative than initially
thought, it appeared effects during the second season might
not be as bad as first feared, at least on average across the
country, BNZ's economist Doug Steel said in his monthly rural
wrap on agriculture.
''No doubt the mildest winter on record has helped.
''Very strong dairy prices and an improving outlook for sheep
and beef prices are promising better per-unit returns this
season,'' Mr Steel said.
In beef and sheep numbers, at least, the South Island
appeared to have fared better than the North Island.
While agriculture sector optimism had returned, Mr Steel
cautioned the production outlook ''differs markedly'' across
the major sectors, with dairying underpinning growth with its
$4 billion increase in earnings.
''Drought was always going to be a drag on economic growth,''
Sheepmeat production during 2013-14 is expected to be down,
beef relatively flat and lambing could produce the lowest
crop since 1955, but milk production was forecast to bounce
back strongly, he said.
''Beef and Lamb New Zealand's recently released stock number
survey reflects the ongoing negative effects of the
early-2013 drought on dry stock farming,'' Mr Steel said.
New Zealand sheep numbers were estimated down 1% on the
previous year at 30.94 million, at the end of June 2013.
''The drought saw a 2.8% decline in North Island sheep
numbers, while there was a 0.7% increase in the South Island.
Overall, New Zealand sheep numbers are at their lowest since
1946,'' Mr Steel said.
Beef and Lamb's forecast for the 2013 lamb crop was for 24.4
million, about 2 million or 7.7% down on the previous season,
''If confirmed after this year's lambing ... this would be
the lowest New Zealand lamb crop since 1955,'' Mr Steel said.
For beef, cattle numbers were estimated 1.3% down on the
previous year at 3.69 million, with a sharp regional
North Island numbers were down 2.5% while South Island
numbers rose 1.8%; with calving expected to be similar to
''For dairy, milk production has started the new season
firmly ahead of year-ago levels,'' Mr Steel said.
A mild winter and good grass cover was generating optimism as
the season built towards its October peak.
Fonterra had raised its milk collection growth forecast, from
2% to 5%.
Very strong international dairy market conditions prevailed,
despite some trade issues relating to the whey protein
concentrate contamination scare, he said.
''It is these conditions that are promising a very large
increase in dairy sector revenues this season,'' Mr Steel
Tight supply-firm demand conditions globally had prompted
Fonterra to further raise its forecast milk price for the
2013-14 season to a record $7.80 per kilogram of milksolids.
''Other dairy companies have also upgraded payout
forecasts,'' Mr Steel said.
The BNZ was estimating higher milk prices would result in
dairy revenue rising by more than $4 billion, compared with
the previous season.
Mr Steel said strong growth elsewhere, such as the
construction sector and the non-food manufacturing and
distribution sectors, would have kept overall economic growth
However, there had been big declines in food processing,
wholesale trade sales and export volumes.
''Collectively, these were a little more negative than we had
initially pencilled in,'' he said.