Meat returns lift economy

‘‘The increasing number of conversions of sheep/beef land to forestry will reduce lamb supply over the coming few years.’’ Nathan Penny ASB economist

Overseas consumers cannot get enough of New Zealand lamb and beef.

Thanks to high demand for red meat, New Zealand’s terms of trade have improved by 1.6 per cent in the three months to the end of June.

The country still imports more than it exports – $15.3 billion compared with $14.3b for the June quarter – and the terms of trade would have been more positive if a greater volume of lamb and beef had been exported.

However, Statistics NZ said export prices for lamb reached their highest point since it began recording the figures in 1982, and followed steady increases from the second half of 2016.

ASB economist Nathan Penny said in his latest commodities report that there was a 50:50 chance that lamb prices would set fresh record highs over spring, particularly as current prices of $8.25 per kilogram were neck-andneck with this time last year.

Nationwide prices topped out at $8.43/kg last spring.

He said lamb export supply remained relatively tight both in New Zealand and in Australia.

‘‘Moreover, the increasing number of conversions of sheep/ beef land to forestry will reduce

lamb supply over the coming few years. While not necessarily a great development for the sheep industry, these conversions will nonetheless underpin lamb prices for an extended period,’’ Penny said.

Statistics NZ overseas trade statistics manager Darren Allan said both lamb and beef prices rose during the quarter, up 4.7 per cent and 5.3 per cent, respectively, but the volume of lamb was down 8.7 per cent.

Compared with the March quarter, dairy product prices rose 11 per cent in the June 2019 quarter.

Prices for forestry products were the only major export commodity to fall, down 1.7 per cent.

New Zealand paid 13 per cent more for fuel because of higher prices for crude oil and petrol but bought less of the products.