Hor­ti­cul­ture, dairy drive rise

CHB Mail - - Gardening -

Hor­ti­cul­ture and dairy are the driv­ing forces be­hind a fore­cast 2.5 per cent in­crease in New Zealand pri­mary in­dus­try ex­port rev­enue for the year to June 2019.

The Min­istry for Pri­mary In­dus­tries re­leased its lat­est Sit­u­a­tion and Out­look re­port this week which showed rev­enue was fore­cast to reach $43.8 bil­lion.

Hor­ti­cul­ture was ex­pected to be the fastest grow­ing sec­tor af­ter un­favourable grow­ing con­di­tions led to more mod­er­ate gains in 2018.

Im­proved grow­ing con­di­tions for the most re­cent har­vests had led to higher yields for ki­wifruit and most other hor­ti­cul­tural prod­ucts.

Ki­wifruit ex­port was fore­cast to rise 22.6 per cent, driven by a strong ki­wifruit har­vest in March-April 2018 fol­low­ing a poor har­vest in 2017, and ris­ing ki­wifruit prices.

Dairy ex­port rev­enue was fore­cast to in­crease 2.1 per cent from last year to just over $17 bil­lion in the year ended 2019, con­sol­i­dat­ing gains made in the pre­vi­ous two years.

Against the back­drop of a re­cent weak­en­ing in global dairy com­mod­ity prices, fore­cast growth in ex­port rev­enues was ex­pected to be driven by a chang­ing prod­uct mix, to­wards higher value prod­ucts such as cheese and in­fant for­mula.

To­tal dairy ex­ports in­creased 13.9 per cent to $16.7 bil­lion for the year ended June 2018. Around half of that $2 bil­lion growth had come from but­ter and an­hy­drous milk fat (AMF), with whole milk pow­der (WMP) and in­fant for­mula also strong driv­ers.

The strong growth in ex­port rev­enue in the last two years had flat­tened in re­cent months and ex­port rev­enue for the June 2018 quar­ter was up only 1.1 per cent on the pre­vi­ous year.

Weak­en­ing de­mand out of China had been re­flected in re­cent Glob­alDairyTrade auc­tions, with falls in but­ter, AMF and WMP prices, fol­low­ing a pe­riod of sus­tained high lev­els.

That would con­strain ex­port growth in the short term, as ex­ports were fore­cast to in­crease $0.2 bil­lion to $17.2 bil­lion for the year end­ing June 2020.

Longer term, sus­tained global de­mand for WMP — New Zealand’s largest dairy ex­port prod­uct — and but­ter should limit the down side of any short­term price falls.

By con­trast, fol­low­ing a pe­riod of sub­dued prices caused by the im­pact of high lev­els of EU in­ter­ven­tion stocks, skim milk pow­der prices were now show­ing signs of growth which un­der­pinned a fore­cast 12.9 per cent in­crease in ex­ports to $1.4 bil­lion for the year ended June 2019.

Meat and wool ex­port rev­enue was fore­cast to con­tract by 1.3 per cent in 2019, as ex­port vol­umes were ex­pected to fall from the high lev­els seen in 2018.

Lamb and veni­son farm-gate prices were fore­cast to in­crease even fur­ther in the year end­ing June 2019 af­ter a record year in 2018.

De­spite higher prices for most prod­ucts other than beef, over­all ex­ports were fore­cast to fall in 2019 due to an ex­pected 2.4 per cent de­cline in lamb, mut­ton and beef pro­duc­tion.

Strong con­sumer de­mand was push­ing lamb and mut­ton prices higher, de­spite higher pro­duc­tion in drought-stricken Aus­tralia and the UK.

It ap­peared the mar­ket was an­tic­i­pat­ing a gap in pro­duc­tion over the next year as pro­duc­tion and ex­ports in New Zealand, Aus­tralia and the UK were likely to re­duce over that time.

Lamb and mut­ton pro­duc­tion was now un­likely to in­crease in New Zealand and Aus­tralia over the next year, and the present high prices were likely to per­sist at least through the year end­ing June 2019.

In con­trast to other red meats, beef prices were show­ing signs of weak­ness in the US, the desti­na­tion for 43 per cent of New Zealand beef ex­ports by value.

Drought con­di­tions in the US and Aus­tralia had re­sulted in el­e­vated man­u­fac­tur­ing beef pro­duc­tion from cull cows which, un­like US prime beef pro­duc­tion, com­peted di­rectly with the lean man­u­fac­tur­ing beef New Zealand ex­ported to the US.

Forestry ex­port rev­enue was ex­pected to be near 2018 lev­els, as log de­mand from China’s con­struc­tion sec­tor was ex­pected to re­main steady.

Look­ing out to 2020 and beyond, the tra­jec­tory of pri­mary sec­tor pro­duc­tion and ex­ports would de­pend on in­dus­try’s re­sponse to an evolv­ing oper­at­ing en­vi­ron­ment, in­clud­ing trade dis­rup­tion, shift­ing con­sumer pref­er­ences, in­creas­ing risk of pest in­cur­sion and an em­pha­sis on sus­tain­abil­ity, the re­port said.

Growth would in­creas­ingly come from get­ting more value from ex­ist­ing as­sets and the de­vel­op­ment of new higher value prod­ucts such as Gold3 ki­wifruit.

Those changes would in­crease the fo­cus to­wards re­defin­ing how the pri­mary in­dus­tries con­trib­uted to the New Zealand econ­omy by in­creas­ing pro­duc­tiv­ity through in­no­va­tion, and by adding more value by deep­en­ing links to cus­tomers and seek­ing new mar­kets.

Hor­ti­cul­ture was ex­pected to be the fastest grow­ing sec­tor af­ter un­favourable grow­ing con­di­tions led to more mod­er­ate gains in 2018.

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