An outbreak of the bacterial disease Psa-V is estimated to cut kiwifruit production from above 110 million trays to 75 million over the next several years.
While New Zealand's kiwifruit industry has grown into a $1 billion annual export earner, since first being introduced to the country in 1904, Psa-V is expected to severely affect production over the next three years or longer.
Kiwifruit recorded the largest fall in price, down 17%, in the ANZ commodity price index for October, although that was consistent with the traditional season pattern as the export season wound down, economist Steve Edwards said.
The index dropped for a fifth successive month, falling by 3.5%, in October, the largest monthly decrease since February 2009.
Cheese prices fell 7%, skim milk powder and butter prices dropped 6%, whole milk prices decreased 4% and casein prices slipped 1%.
Other large falls were seen in the prices of aluminium and beef which eased 5% and 4% respectively. Skin prices increased 3% and wool prices inched up 1%.
New Zealand is the world's third largest kiwifruit producer behind Italy and China, with Chile growing in importance.
Prices were stronger last year and things had remained steady this season, but the higher New Zealand dollar has reduced returns at the orchard-gate.
However, production yields had helped provide an offset for lower pricing, especially for the yellow-fleshed kiwifruit.
Reductions in production, caused by Psa-V, were likely to lead to an increase in grower prices. Higher prices were likely due to increased competition for limited supply from packhouses and the smaller crops being shipped to the highest returning markets.
However, that would be insufficient to compensate growers for the loss of production, Mr Edwards said.
New Zealand exported $1.1 billion of kiwifruit in the 12 months to September, representing 2.25% of the country's total merchandise exports.
Japan was the largest single market for exports, taking more than a quarter of the total value, followed by countries in Europe, Asia and Australia.
Over the past two decades, Asia has increased its share of kiwifruit exports, particularly China, Korea, Taiwan and Hong Kong.
Average prices of dairy products resumed their slide in Fonterra's latest auction, the ninth decline in the past 10 sales and the first since the company cut its forecast 2012 payout.
The GDT-TWI Price Index fell 1.2%, according to the latest results on the global DairyTrade auction website.
The average winning price declined to $US3511 ($NZ4417) a metric tonne. Whole milk powder, the biggest product by volume, fell 0.8%.
Whole milk powder fell to $US3487 a tonne in the latest sale, while skim milk powder gained 0.2% to $US3292.
Anhydrous milk fat fell 9.3% to $US3309 a tonne and milk protein concentrate fell 10.7% to $US5608 a tonne.
Rennet casein jumped 35% to $US9182 a tonne. Butter milk powder fell 2.2% to $US2934 a tonne and cheddar fell 3.2% to $US3406 a tonne.
- Additional reporting BusinessDay
