- Overview
- Exports
- Gross Agricultural Revenue and Expenditure
- Livestock numbers
- Producer Prices
- Forestry Outlook
OUTLOOK FOR EXPORTS AND GDP
Overview
- The primary sector has been affected by some significant international and national shocks over the last two years that are expected to influence production, prices and exports over the next few years. These include the Asian financial crisis, the Russian financial crisis, weaknesses and uncertainties about the Brazilian economy, the depreciation of the New Zealand dollar and two seasons of drought. While there are encouraging signs of a faster than expected recovery in some Asian countries, for example Korea and Japan, there is still a bleak outlook for Russia.
- The most recent forecasts carried out by MAF Policy were for the Treasury's Pre-election Economic and Fiscal Update. The results of this round are presented below.
Exports
- For the year ending March 2000:
- pastoral exports are forecast to fall by 5.5 percent to $8.78 billion. This is mainly due to a $0.62 billion fall in dairy export values as a consequence of weak international prices;
- horticultural exports are forecast to rise by 3.7 percent to $1.62 billion, reflecting rises in kiwifruit, fresh vegetables and processed fruit (wines);
- forestry export value is forecast to rise 15.9 percent to $2.76 billion, mainly reflecting volume growth to Asian markets.
- For outyears to 2003:
- pastoral export value is forecast to increase to $10.41 billion reflecting rising meat and dairy volumes;
- horticultural export value is forecast to increase 17.7 percent to $1.83 billion, reflecting growth in processed fruit, kiwifruit and apples;
- forestry export value is forecast to rise 19.4 percent to $3.29 billion, as export volumes continue to build for log, lumber and panel products.
- Details of export value of products are set out in Appendix 3.
Gross Agricultural Revenue and Expenditure
- Over the forecast period to 2003:
- revenue is expected to rise 18.6 percent to $13.22 billion, reflecting growth from dairy, sheep, beef and deer;
- intermediate consumption and contribution to GDP are expected to rise by the same rate as revenue;
- operating surplus and agriculture sector income (for tax purposes) are both expected to rise over the forecast period by a higher rate than gross revenue, because of moderate wage growth and a low interest rate environment.
- Details of revenue and expenditure components are set out in Appendix 4.
Livestock numbers
- Total sheep numbers are forecast to bottom out at 45.43 million at June 2000 and then slowly increase to 45.7 million by June 2002. Total beef cattle numbers are forecast to increase to 4.60 million by June 2002. The dairy milking herd is forecast to increase to 3.75 million at June 2002. Total deer numbers are forecast to rise to 2.20 million by June 2002.
Producer Prices
- 5All grades lamb price for the year to September 1999 is estimated at $41.8 per head, and is forecast to remain around this level over the next two years. Prime steer price for September year 1999 is estimated at 241 c/kg, and is forecast to rise to 265 c/kg and 273 c/kg in the next two years. Average wool price at auction for year to June 1999 was 404 c/kg clean, and is forecast to remain depressed over the next two years at 405 c/kg and 406 c/kg, respectively. Milksolids payout for the year to May 1999 was 358 c/kg, and is forecast to fall to 353 c/kg in 2000 and then rise to 357 c/kg in 2001. Kiwifruit grower price for the year to March 1999 was $5.58 per tray, and is forecast to rise to $6.39 per tray in 2000 and then fall to $6.05 per tray in 2001.
Forestry Outlook
- Logs will continue to be an important part of New Zealand's forest product export mix. Some vertically integrated companies are putting more logs through their own processing plants (by using multiple shifts) to enhance market diversification. Developing markets with good potential are India, China and expansions of lumber into the US. Markets in the US and Australia continue to offer good prices and volumes for processed solidwood products, highlighting the value of downstream processing.
- Industry projections indicate that by 2010 forestry could:
- supply 30 million cubic metres of wood per annum from forests already planted;
- occupy 2.5 million hectares, or 9 percent, of New Zealand's total land area (at current planting rates);
- account for nearly 2 percent of the world's industrial roundwood (based on current total world production);
- need to have invested up to $6.5 billion in new wood processing facilities if it is to process all of the available volume (an optimistic scenario). The investment could comprise an additional 134 medium-sized sawmills, 87 remanufacturing plants and either 20 panelboard mills or six pulp and paper plants (approximately a three-fold increase);
- be adding an extra $5 billion per year to current export earnings.
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