Tractors cut a path to record trade

For the year ended January 2018, the value of tractor imports was up 51 per cent compared with the previous year. Picture / Getty Images

In a sign of growing confidence within the agricultural sector a big jump in tractor imports and other farming supplies has helped boost total trade activity to record levels in January.

Goods exports were a record $4.31 billion for a January month, up 9.5 per cent on last year, while imports surged 17 per cent to a new high of $4.88b for that month.

That resulted in an unexpectedly large trade deficit of $566 million - wider than the $227m deficit in January last year and the largest for the month since 2007, Statistics New Zealand said.

Imports of mechanical machinery and equipment jumped 23 per cent to $700m, elevating it to the largest import commodity group for the month.

Imports of petroleum and products jumped 19 per cent to $560m.

Stats NZ also noted a strong lift in agricultural imports with the value of imported tractors rising $27m - or 191 per cent - in January from the same month last year.

For the year ended January 2018, the value of tractor imports was up 51 per cent compared with the previous year.

Imports for other agriculture inputs, such as fertiliser and palm kernel (a feed supplement for dairy), also rose in January compared with last year, and for the year, Stats NZ said.

Fertiliser imports rose by $9.2m (30 per cent) for the January month. Annual imports rose to $653m, but are still 27 per cent lower than the April 2009 year.

The lift in imports of agricultural machinery did fit with a picture of improving confidence in the sector, said ASB rural economist Nathan Penny.

"The stars are aligning across the agriculture sector in general," he said. "We are seeing pretty good prices for most of the sectors within agriculture."

The rise in exports was led by milk powder, butter, and cheese, the country's largest commodity export, which increased 8 per cent to $1.37b.

The value of meat and edible offal exports jumped 17 per cent to $689m, while exports of logs, wood and wood articles surged 26 per cent to $292m. Fruit exports fell 12 per cent to $85m.

"On top of that, increasing agricultural production should boost export volumes over the remainder of the year," Penny said. "At the same time, import values are likely to remain firm on the back of similarly firm domestic demand."

There were signs of inflation emerging in the inputs for the agricultural sector, but that was good in some respects as it reflected rising demand, he said.

"I guess there is a still a little caution around with the weather recently, but generally we think that this year that investment spend is going to grind higher."

More broadly there was increasing demand for machinery and equipment across a range of sectors including construction and manufacturing, he said.

"We expect more of these sorts of anecdotes to come through," he said.

"Those machinery numbers have been good so it's not just an agricultural story, its a broader economy story"