Record primary sector exports

Very strong log prices in the year to June 2014 have been supported by record log production....
Very strong log prices in the year to June 2014 have been supported by record log production. Photo by ODT.

Primary sector exports will reach record levels of $37.7 billion for the past year - about $1.3 billion more than previously forecast.

The annual Situation and Outlook for Primary Industries, released this week by the Ministry for Primary Industries, showed export prices increased across most sectors for the year ending June.

Both dairy and forestry sectors stood out with good increases in both price and production, Primary Industries Minister Nathan Guy said.

Dairy now accounted for 46% of total primary industries export value and 35% of total New Zealand merchandise export value, the report said.

The successful dairy season meant an estimated 35% increase in contribution to New Zealand's nominal GDP by agriculture, due to increases in payments and milk solids production in the year ended March 31.

While milk solids production in 2014-15 was forecast to rise a further 3.2%, international dairy prices were forecast to retreat in the coming year as global supply of dairy products increased.

Dairy exports were forecast to decline 10.2% to $15.8 billion for the year ending June 2015, but then increase steadily to $18.4 billion by the year ending June 2018.

The value of New Zealand's meat and wool exports was expected to increase by about 22% over the next five years, driven by high prices from a globally constrained supply of beef and lamb, and steadily growing demand in Asia.

Domestically, dairy farming expansion continued to be a threat to the meat industry, but productivity improvements were projected to offset static to declining herd and flock numbers, the report said.

Lamb export value was estimated to have lifted 13.6% in the year to June 2014 to a record $2.57 billion.

There had been ''exceptional growth'' in exports to China. Exports of lamb and mutton increased 76% in the year ended June 2013.

Domestically, the average lamb schedule price for the year to June 2014 was estimated at $5.37/kg, up 12.6% on the previous year.

Schedule prices were forecast to continue to improve due to higher international prices and an assumed weaker New Zealand dollar against the British pound.

Total meat and wool export value (including hides and skins, meat-related products and manufactured wool products) for the year to June 2015 was estimated to increase further to $8.2 billion and projected to reach $9.4 billion by 2018.

Venison production was expected to decline with a declining deer herd, due to conversions to dairy and a period of comparatively low returns for venison.

Prices in the Euro zone were expected to stabilise this year to June and improve next year.

Further out, higher demand from economic growth in the key European market would combine with constrained supply to increase average prices.

The declining sheep flock would see wool production continue to fall over the report's four-year outlook period.

This year to June 2014, wool export volumes were estimated to have declined by 7.1% to 117,000 tonnes following the 2013 drought.

Very strong log prices in the year to June 2014 were supported by record log production.

But a global production response to higher prices would be felt in the coming year, particularly in China where demand growth was expected to slow.

Forestry export value for the year ending June 2015 was forecast at $4.7 billion, down 8.5% due mainly to lower log prices.

By 2018, export value was projected at $5 billion due to increased log volume, lower log price and higher prices for other forest products.

Horticulture export value was forecast to increase 5.2% to $3.83 billion in the year ending June 2015, boosted by a record harvest of grapes in 2014, and horticulture export revenues were forecast to surpass $4 billion in 2016, described as a major milestone for the sector.

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