Introduction and Overview
Introduction
This Situation and Outlook for New Zealand Agriculture and Forestry Update (the Update) derives largely from projections prepared for The Treasury for their Budget Economic and Fiscal Update, released in May 2004. This year the Ministry of Agriculture and Forestry's (MAF) Update has been expanded to:
- assess the main reasons for changes in the outlook for the sectors since the release of our last Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) publication in December 2003; and
- analyse the impacts of two alternative exchange rate scenarios on prices, export values and gross agricultural sector revenue.
New Zealand is perhaps unique among developed countries in that its land-based primary sectors are strongly export orientated, have very low import barriers, and are not supported by export or production subsidies. Because of this, the revenues of its agricultural and forestry product exporters and producers are largely at the mercy of changes in international product prices and exchange rates.
One of the major problems involved with forecasting for the agricultural and forestry sectors is that exchange rates can not be forecast over the medium term. This is due to the large number of factors involved. It is for this reason that The Treasury always refer to their exchange rates over an outlook period as `working assumptions' rather than forecasts. Because of this, any projections based on a single set of exchange rate assumptions will have a degree of uncertainty associated with them.
Therefore, in this Update we also present two alternative exchange rate scenarios - a high and a low scenario - in addition to our baseline (or main) projections. The alternative exchange rate scenarios are based on the projections of seven other financial and economic organisations, in addition to the exchange rate assumptions supplied by The Treasury (used by MAF for the baseline projections).
We hope that these additional scenarios provide readers with a greater degree of understanding of the prices, export values, and agricultural sector revenues that could potentially result over the outlook period. However, as with any projections, the results are only indicative and they do not portray the full range of possible outcomes.
The outlook period used for the projections is from 2003/04 to 2006/07. The baseline projections relate to macroeconomic assumptions current as at 2 April 2004 and other information current as at late April 2004. The exchange rate assumptions supplied by other organisations were current as at 19 April 2004.
While this is designed to be a stand-alone publication, it is also intended as an update to the information released in SONZAF 2003. Therefore readers are encouraged to also refer to SONZAF 2003 at the following website location: http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/sonzaf/2003/httoc.htm
Contact for Enquiries
Monitoring and Evaluation
PO Box 2526
Wellington
New Zealand
