Situation and Outlook for New Zealand Agriculture and Forestry: Update May 2003
Summary
- MAF Policy provided forecasts and projections for major pastoral, horticultural and forestry products on 28 March 2003 to the Treasury as input for their Budget Economic and Fiscal Update (BEFU). These forecasts were based on macroeconomic assumptions as at 18 March 2003.
- Since the completion of the original forecasts, we have made adjustments in the light of recent statistics and information. This includes provisional export data and production data for the March quarter.
- Growth in gross domestic product (GDP) for New Zealand's 20 main trading partners was 2.7% for December year 2002, after having slumped to 1.5% in 2001. Some increase is expected over the next two years. The New Zealand dollar (NZD) is assumed to appreciate to a peak in March quarter 2004 and then track back over the next three years.
- Annual average international prices are estimated to be down in 2003 compared to 2002 for dairy products (year to May), lamb (year to September) and beef (year to September), but estimated to be up for wool (year to June). Over the next two years, international prices are expected to rise for dairy, beef and wool. Forestry product prices for March year 2003 fared better, with further rises over the next two years for pulp and paper products. However, the appreciating exchange rate has delivered an adverse shock to the export sectors.
- Export volume increases are expected from dairy and forestry products, in the main, with volume increases also expected from wine and venison, which are significant in their own right.
For the year ended March 2003, the provisional free-on-board (FOB) value of pastoral exports was down 13% to $12.2 billion largely due to a 34% fall in dairy prices. By year ending March 2008, export value is projected at $13.3 billion due to recovery in dairy prices and increasing volumes.
For the year ending March 2003, the provisional FOB value of horticultural exports was down 1.1% to $2.09 billion, as rising wine export volume moderated export value falls in most other products. By year ending March 2008, horticultural export value is projected at $2.83 billion, due to rising wine volumes and kiwifruit prices.
·Contribution to GDP (in current prices) for year ended March 2003 is estimated to have fallen by 15% to $7.97 billion. For the year ending March 2008, contribution to GDP is projected at $8.70 billion.
For the year ended March 2003, the provisional FOB value of forestry exports rose 1.7% to $3.71 billion, due to rising volumes moderated by falling prices. By year ending March 2008, export value is projected at $4.58 billion, mainly due to rising export volumes.
- Figure 1 shows the trends in exports for pastoral products, horticultural products and forestry products, as well as contribution to GDP for the agriculture sector.
- Table 1 sets out the key facts for 2001/02 to 2003/04 with respect to production, exports and prices of pastoral, horticultural and forestry products.
- Producer prices for 2002/03 are estimated to fall for many key farm and orchard products due to a combination of lower international prices and an appreciating NZD. However, the prices for wool, apples and kiwifruit are all expected to increase. Producer prices in 2003/04, with the exception of beef, venison and milksolids are forecast to fall.
- Log export provisional prices fell in year ended March 2003 and are expected to fall further in 2003/04 due to the assumption of an appreciating NZD.
Contact for further information:
Rod Forbes
Phone: (04) 474 4222
Email: rod.forbes@maf.govt.nz
