5 August 2008

MAF Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) 2008: Key facts

This document provides an overview of some of the key facts and statistics that can be found in MAF's Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) 2008.

MAF's forecasting is rigorous, but no forecasting is absolute. Our assumptions are for "normal" climatic conditions and don't allow for natural disasters on a domestic or world scale nor major economic changes.

The Treasury's exchange rate assumptions from the 2008 Budget are used in SONZAF 2008.

Full copies of the report are available on the MAF website at http://www.maf.govt.nz/SONZAF/2008

Dairy

Dairy export earnings are projected to peak next year at $12 billion - more than 40% higher than earnings two years ago.
Dairy export earnings are projected to ease back to $10.5 billion in 2010 before rising again to just under $12 billion by 2012.
The weighted average payout (net of industry goods levy) for the next four years averages around $6 - significantly higher than the previous five year period. Detailed payout projections are $6.90 (2009), $5.78 (2010), $5.98 (2011), $6.32 (2012).
Demand is growing from new markets in China and OPEC countries. OPEC countries account for 21% of New Zealand's total dairy exports.
The South Island continues to drive dairy herd expansion. The South Island herd grew by 13% last year - 31% of New Zealand's dairy herd is now in the South Island.

For detailed dairy projections refer to page 73 of the SONZAF report.

Beef

Manufacturing beef (a type of minced beef) prices are expected to rise by more than 30% over the five year forecast period.
Beef export volumes are projected to fall by about 2% next year due to drought but to grow back to 2007 levels by the end of the five year forecast period.
Export returns currently at $1.5 billion are expected to climb steadily to $2.26 billion by 2012.

For detailed beef projections refer to page 68 of the SONZAF report.

Lamb

Sheep numbers were down 4% at June 2007.
The drought and recent low prices are pushing further declines in sheep numbers - adult sheep slaughter increased by 28% for the year ended June 2008.
Lower stock numbers and lower weights mean lamb export volumes are projected to fall through the five year period by 11% to 287 000 tonnes.
Higher prices are set to push overall export earnings over the same period up by 25% from the current $2.1 billion to $2.6 billion.

For detailed lamb projections refer to page 61 of the SONZAF report.

Wool

The average wool sale price is projected to rise by just over 40% over the next five years to $5.35 per kilogram.
Wool volumes are projected to plateau as falling sheep numbers balance higher prices at 142 000 tonnes.
After an initial fall export earnings are projected to grow by 29% over the five year period to $795 million.

For detailed wool projections refer to page 64 of the SONZAF report.

Forestry

Log prices and pulp prices are both projected to climb by more than 30% over the next five years.
Timber and panel export prices are projected to fall before recovering but volumes remain relatively flat over the next five years.
Overall forestry export returns are projected to grow from $3.3 billion in 2008 to $4.5 billion in 2012.

For detailed forestry projections refer to page 55 of the SONZAF report.

Wine

Wine grapes are now the largest single horticultural crop in New Zealand at more than 25 000 hectares.
A big harvest this year will boost export volumes by 30% in next year and increased plantings will push exports up by more than 50% by 2012.
The value of wine exports is projected to rise by 76% to $1.3 billion by 2012.
Sauvignon Blanc makes up 75% of wine exports and is New Zealand's largest wine export followed by Pinot Noir, Chardonnay and Merlot.

For detailed wine projections refer to page 41 of the SONZAF report.

Kiwifruit

The current average price of $8.1 per tray of kiwifruit is projected to grow to $10.7 a tray by 2012.
Predicted kiwifruit export volumes remain static at just under 100 million trays over the next five years.
Kiwifruit export returns are projected to grow from $779 million dollars to $1.06 billion by 2012.

For detailed kiwifruit projections, refer to page 38 of the SONZAF report.

For further information or copies of the report please contact:
Deidre Hill
MAF Communications
Tel: 04 894 0192, 029 894 0192