A ''very positive'' medium-term outlook for New Zealand's primary industries has been signalled in the latest Situation and Outlook for Primary Industries report.
The report, released yesterday by the Ministry for Primary Industries, predicted primary sector revenues to increase 2.2% to $24.1 billion in the year to June 2014, and to grow at a compound annual growth rate of 7.4% to $29.5 billion in 2016-17.
The medium-term outlook was based on maximising opportunities in Asian markets, recovery from the global recession and an assumption of a slightly lower New Zealand dollar against trading currencies.
Primary industries were continuing to perform well, in the face of ''significant challenges'' this year, the report said.
The long-term outlook for dairy was positive with steady growth in domestic production and firm demand from emerging markets.
Dairy export revenue was expected to drop 5.5% to $12.9 billion in the year ended June (2013), due to a fall in production, lower prices and high exchange rate.
It was expected to increase by 8.1% in 2013-14 and was forecast to reach $17.7 billion for the year ended June 2017.
It had been a tough year for the meat and wool industry, as it dealt with the most widespread drought since 1945-46, a strong New Zealand dollar, and sheep meat, venison and wool prices retreating from near historic highs of the previous years.
Export values of meat, wool, hides and skins for the year ending June were estimated at $5.95 billion and forecast at $6.37 billion in the year ending June 2017.
Beef export revenue for the year ending June was estimated to decline 3.3% to $1.94 billion, reflecting a 4.9% fall in price and a slight increase in volume.
By 2017, beef export value was projected at $2.17 billion due to increased international prices and an assumed depreciation of the NZ dollar.
Over the next 18 months, New Zealand beef export prices in US dollar were forecast to remain high, with commercial beef production in the US not expected to increase until the 2016 calendar year.
In the longer-term, beef prices were expected to increase slowly due to economic recovery in main beef markets and increasing demand for animal protein in Asia and some developing countries.
Lamb exports were estimated to decline 16.4% to $1.93 billion in the year ending June, reflecting a 20% decline in export prices and a 4.8% increase in export volume.
Lamb exports were forecast to decline by more than $250 million in 2013/-4 due to the 2013 drought but then recover.
The average lamb schedule price for the year ending June was estimated at $4.75 per kg, down more than 25% from last year's record average.
The schedule price was expected to average $4.97 per kg. The drought was expected to contribute to a 2.9% decrease in breeding ewe numbers and a 38% decrease in mated ewe hogget numbers as at June 30, 2013. Consequently, lamb production in the year ending June 2014 was forecast to fall 10.6% to 341,000 tonnes.
Total venison export value for the year ending June 2013 was estimated to fall 11.7% to $181 million, mainly reflecting a 12% decline in export price.
Deer numbers continued to fall and further declines were forecast.
Wool export value for the year ending June was estimated at $633 million, down 16.3% on the previous year largely due to a 19% decline in the average export price.
By 2017, export value was projected to reach $707 million due to increasing world prices and an assumed exchange rate depreciation.
In the longer-term, New Zealand was well positioned to increase export returns from the forest and wood products industry, the report said.
Horticultural exports earned $3.5 billion in the year ended March 31, similar to the previous year.
Kiwifruit and wine exports each exceeded $1 billion with increases in export prices compensating for a reduction in export volumes.
The medium-term outlook for New Zealand's wine industry was encouraging. The national vineyard planted area has stabilised, market development activities were becoming more co-ordinated, and new initiatives were under way to promote the sustainability credentials of New Zealand wine.
New Zealand was expected to export 165 million litres of wine, valued at nearly $1.2 billion in the year ending June 30, representing a 7.8% fall in export volumes compared with 2012. However, export revenue was expected to be similar due to an anticipated increase in the average price per litre to $7.20.
Export volumes for the year ending 2014 were forecast to increase to 185 million litres, due to the near-perfect growing and harvest conditions across New Zealand for the 2013 vintage.
Export prices for wine were predicted to further improve over the forecast period, rising to almost $8 per litre in 2016 and 2017.
The outlook was encouraging for the apple and pear sector, with an increasing proportion of new varieties planted and potential for ongoing market expansion in Asia, while export earnings would be tempered by the high New Zealand dollar over much of the outlook period.
Significant growth opportunities for fresh vegetable exports were limited in the short to medium-term due to high costs of production, competing supplies in overseas markets and significant market access issues.
An increase in irrigable land could help expand New Zealand's vegetable growing capacity. The medium-term outlook for the seafood sector was ''reasonably subdued''.
Key points
Key points from the Situation and Outlook for Primary Industries report. -
• Dairy sector medium-term outlook for steady growth continuing at rate of 8% compounding.
• Challenging times for meat industry; drought effects have added to existing competitive pressure for land use.
• Forestry challenge is to extract maximum value from large harvest volume coming on-stream.
• Sharp contraction in kiwifruit volume due to the vine disease Psa; expected to rebound in medium term.
• Better balance in between wine supply and demand expected in medium term.
• Pipfruit prospects dependent on uptake and management of new varieties.
• Prospects for export vegetable crops linked to development of irrigation.
• While seafood volume growth is naturally constrained, slight price increases expected.
