11 Red meat showcase Vol 16 No 24, June 19, 2017
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Bright future here Neal Wallace & Bryan Gibson
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XPORT earnings will rise this year despite calamitous weather and natural disasters and even better times are ahead, the Primary Industries Ministry predicts. Its latest Situation and Outlook report it expected export receipts to be up 2.4% for the year to June 30. They would grow 18% in the next four years from $38.1 billion this year to $45b in 2021. This year’s forecast compared to $37.2b last year and came on the back of strong global prices for forestry, dairy and growing horticulture volumes. Primary Industries Minister Nathan Guy said that achievement was a credit to the primary sector. “It’s been a really challenging year for our primary sector when you think about droughts in Northland and Hawke’s Bay, the prolonged drought period in North Canterbury.” The country has also been rocked by cyclones, a very wet autumn and the Kaikoura earthquakes, which sent shockwaves through the South Island and Wellington and affected grape growers. “The primary sector is in really good heart and I’m picking that up at the Fieldays.” It was a good news story and Guy was excited by predictions the primary sector could generate $41b in the year to June 30 2018, a significant 9% lift on this year. “We’ve got a very diverse sector.”
Meat and wool exports fell 9.8% from 2016 to 2017, after growing 13.6% in the previous two years. The report expected receipts to grow 1.6% between 2017 and 2018 despite lower sheep and cattle numbers but that would be dwarfed by dairy, which was forecast to grow 18.5% in the same period. “The fundamentals for continued trade growth remain strong. “Our major trading partners are experiencing relatively robust demand for food imports as well as overall economic growth. “Emerging opportunities for expanding trade in southeast Asia and the Middle East also provide reason for optimism.” MPI predicted average growth of 3.9% in export earnings for the next few years, underpinned by price gains across most sectors. The recent lift in dairy prices was expected to be sustained, pasture productivity was predicted to improve and new varieties and expanded planting of grapes, kiwifruit and apples and expanded sales of addedvalue products would also be drivers. The latest ANZ Agri Focus report agreed with MPI, saying the outlook for agricultural sectors remained positive. There was some uncertainty with possible policy changes in China that might not be conducive to economic growth and with United States trade and tax policies. But ANZ expected dairy prices of $6.75/kg MS, lamb to settle next season in the low to mid $5/
kg mark, bull beef about $4/kg and steers about $5/kg. Venison could reach record levels of $8/kg to mid $9/kg on the back of low inventory while horticulture was also expected to enjoy prosperous times. Green kiwifruit should bounce back to $6 a tray, a 37% increase, on the back of lower New Zealand supply and lower Italian production while SunGold should sell for close to $9 a tray, benefiting from expanded markets. Pipfruit returns were mixed depending on the supplydemand balance for each variety while a smaller grape crop should allow wine exporters to be choosier and to restore earnings per bottle. Sauvignon Blanc grape prices could ease slightly to $1750 a tonne with other varieties expected to either ease slightly or be stable. The MPI report highlighted just how dependent NZ was on the primary sector, responsible for over 78% of merchandise exports, an increase from 72% in 2012. It calculated 16% of all workers were employed in the production, manufacturing or support industries in the primary sector. Primary industries contributed $24b to the NZ economy in 2016, which was about 10.6% of GDP, of which $11.5b came from primary production and $12.6b from processing.
MORE:
Fieldays stories on pages 3, 5, 8, 10, 11, 14, 21.
GOOD TASTE: The primary sector is in good heart as bright times are predicted, Primary Industries Minister Nathan Guy said at Fieldays where Grace from Morrinsville tried Zespri’s offering.