Kiwi primary sector export revenue is expected to fall in the year ahead but the good news is our selling into Asia has turned into a "stampede", a Government report shows.
The Ministry for Primary Industries (MPI) has just released its annual Situation and Outlook for Primary Industries report, which for the first time includes seafood.
High prices, solid production and record forest harvests have ensured strong revenue in the past year, said MPI deputy director-general Paul Stocks from the Fieldays at Mystery Creek.
Stocks said revenue is predicted to fall in the coming year, mainly because production levels are unlikely to be as high as they've been, he said.
"You can't assume we'll have the same kind of weather conditions we have had this year.
"New Zealand is more dependent on weather because we are almost solely reliant on grass growth for our dairy production, in contrast to countries like the US which can also count on various crops and grains to feed herds."
The high New Zealand dollar continues to be an ongoing concern for exporters, the MPI report states.
"We've based our forecasts on an expectation that it will continue to hold up for some time, but ultimately depreciate due to New Zealand's high level of overseas debt," said Stocks.
He is not concerned though and said "the odd blip here and there is to be expected".
The major positive is that New Zealand's primary industries are continuing to sell more into Asia, Stocks said.
"With recessionary pressure in Europe, the trend towards Asia has turned into a stampede. Asia has been the boom story for us."
Continuing to build free trade agreements with countries in Asia and elsewhere will only help diversify our markets, he said.
"They have large and growing populations and they are emerging into developed markets, and a lot of the products we sell are perfect for them.
"Dairy, for example, is a high calorie, high protein product and one which you can consume more of as you move up the income ladder."
Diversifying into new markets also means traditionally low-value Kiwi products can now gain good prices.
"Take lamb flaps, they used to be a low level product, but now in Asia, it's a high value product so you can get a high price for it," Stocks said.
Sector by sector, the strongest performance came from dairy, the MPI report showed.
Regular rainfall over summer and an increase in herd numbers saw Kiwi dairy production increase by 10 per cent in the year to the end of May.
But while the milk price is strong at present, a drop is expected due to weaker international demand and increased production in the EU and US.
The MPI report showed meat production also increased over the year, helped by good climate and pasture conditions.
Lamb prices are dropping faster and further than the normal seasonal decline as cash-strapped consumers in Europe look to buy cheaper meats.
Demand and prices for beef have held up because of robust demand from Asian markets, and falls in US and Australian production.
Horticulture has struggled, partly as a result of greater exposure to the European market.
Gold kiwifruit production fell as it battled the vine disease Psa, especially around the Te Puke area. Stocks said he thought it would be a good couple of years before the industry bounces back.
Record volumes of logs were harvested, much of it going overseas in the form of raw logs, with strong demand from China. Export log volumes are not expected to increase over the next year.
High log prices and weaker demand from traditional export markets like the US, has seen pressure come on the Kiwi timber processing industry.
Strong demand for our seafood from China and Australia has helped keep prices up. The MPI expects aquaculture production to increase."