The Ministry for Primary Industries yesterday released its annual Situation and Outlook for Primary Industries report.
Prices were falling from relatively high levels but, in general, remained quite favourable, MPI deputy director-general Paul Stocks said in a statement.
Production this past season had generally been good, even great for some, due to favourable climatic conditions.
Primary industries were continuing to sell more to Asia and, with recessionary pressure in Europe, the trend towards Asia had "turned into a stampede", Mr Stocks said.
Gross agricultural revenue was estimated to have increased by 3% in the year ended March 31, 2012, reflecting higher prices for lamb and wool exports in particular.
Weakening international prices for most agricultural products, together with the assumption of continued strength in the New Zealand dollar, resulted in lower total gross revenues over the next two years.
Expected increases in total gross revenues over 2015 and 2016 mainly reflected an assumed depreciation of the dollar.
Dairy export revenue was expected to reach $13.9 billion for the year ending June 30 this year, up 5.6% and buoyed by strong production that had more than offset weakening prices for dairy commodities in world markets.
That was then expected to decrease by 9.2% to $12.6 billion in 2012-13 with the expected weakening of dairy prices and the modest decrease in production that had been forecast.
Revenue was forecast to reach $17 billion for the year ending June 30, 2016, with an expected rise in domestic production, recovering international dairy prices and a depreciating New Zealand dollar.
After hitting record levels in 2011, nominal producer prices for lamb, beef and coarse wool had been falling. Those high prices were due to past declines in livestock inventories in overseas markets and New Zealand, high feed grain prices and robust demand from Asia.
Producer prices were forecast to decrease over the next two years as production increased in Australia and the US. Further out, increasing demand and weakening exchange rate assumptions would cause prices to rise again.
Meat and wool export revenue for the year ending June 2012 was estimated at $7.2 billion and, while falling over the next two years, revenues were forecast at $7.9 billion in the year ended June 30, 2016.
Horticultural exports earned $3.4 billion in the year ended March 31, 2012, up from $3.2 billion in the previous year.
Kiwifruit and wine exports both exceeded $1 billion, driven by increases in export volumes.
Export earnings in the short-term would remain relatively static or decrease slightly, owing to lower exports of kiwifruit and the high value of the New Zealand dollar.
Strategies to lift in-market prices and reduce production and supply chain costs were a priority to maintain profitability in the sector. Many horticultural exporters were seeking market development opportunities in Asia.
Total forestry exports, excluding newsprint, reached $4.3 billion in the year ending March 31, 2012. The period was characterised by strong demand for logs, in contrast to weak demand for sawn timber.
Strong log demand from China and India was expected to continue, as a result of continuing economic growth.
Record global grain production was realised in 2011-12 as a result of increased areas planted, combined with favourable climatic conditions.
High global stocks were now at levels last experienced in the early 2000s. As a result of high stocks and continuing production increases, world wheat prices were projected to weaken through to 2017.
Population growth and increasing prosperity was expected to boost grains consumption.
The New Zealand arable sector was well-positioned domestically and globally but would remain under pressure to adjust crop mix towards seed production, develop new markets and to increase efficiency and productivity over the next few years.
The outlook for the fisheries sector was positive, with earnings for the year ending June 30, 2012 forecast to rise from $1.56 billion to $1.64 billion and to continue to increase in the medium-term.
