Horticulture is fast becoming agriculture's "fourth engine" and will soon rival the meat industry in export receipts, ASB rural economist Nathan Penny says.

The Ministry for Primary Industries, in its latest update, said horticulture's strong growth is forecast to continue, with exports expected to reach $5.4 billion for the year ending June before rising to $5.6b in the next year.

Meat and wool export revenue is forecast to increase 4.2 per cent to $8.7b in the year, supported by strong red meat prices and increasing exports of value-added products, then to $8.8b the following year.

Strong overseas demand for gold kiwifruit, wine and new apple varieties is expected to continue supporting strong prices across the sector.


Expanded planted areas for kiwifruit and apples are forecast to contribute to higher export volumes and revenue.

Penny says horticulture is looming large on investors' radar screens.

"For so long it was all about meat, dairy, and forestry - the three engines of primary production," Penny told the Herald.

"But now it's about fruit and vegetables, horticulture and viticulture - the fourth engine."

Penny said the rise and rise of horticulture was adding much-needed diversity to a primary sector, which has for years been dominated by dairy.

"That's a really good thing for primary production in New Zealand and for the New Zealand economy generally," he said.

"There is a lot of potential growth that is untapped and that can kick on over the next 10 years - comfortably," he said.

Dairy is butting up against constraints - particularly from an environmental perspective - but horticulture is not.


Penny said kiwifruit's recovery after the destruction caused by the outbreak of Psa in 2010 had been "phenomenal"- aided in no small part by the advent of the new cultivar, Gold3, which is marketed by Zespri as Sungold.

"The recovery has blown even the most optimistic of scenarios right out of the water," he said.

Horticulture's success has also played a part in a regional growth spurt for the Bay of Plenty, Northland, Nelson and Central Otago, areas that are benefiting from the tourism boom as well.

Penny said by 2030, horticulture - which already level pegs separately with sheepmeat and beef - may rival the meat trade in total.

Horticulture New Zealand chief executive Mike Chapman agreed with Penny's "fourth engine" description.

"He's not wrong," Chapman said. "The question now is how long will it be before it really starts to bite," he said.


Chapman said the achievements of kiwifruit, through Gold3, and the apple sector with its new, high-value varieties, were well understood, but he said horticulture in broad terms was also going ahead.

"If I look across the board - all the crops that we represent - every little group of growers is looking to increase returns," Chapman said.

Outside the mainstream, Chapman said blueberry exports went up by 50 per cent between 2015 and 2016, cherry exports by 30 per cent and onion exports by 38 per cent.

The development of Pukekohe brown - a sweet tasting onion with good storage characteristics - has been a boon for onion exports.

"Success has been about developing varieties that other countries do not have, to give us that market advantage," Chapman said.

Research and development work from the government-owned research institute Plant and Food - which developed Gold3 - has been an important driver for horticulture.


In the big picture, Chapman said, people were thinking longer and harder about the best land use.

Kiwifruit growers - particularly for gold - can now look further afield thanks to the variety's ability to be grown in other areas.

Dave Courtney, chief grower and alliances officer with kiwifruit marketer Zespri, said kiwifruit had had a strong run, post-Psa, but that "strong growth opportunities" remained.

Ninety per cent of "green" kiwifruit is grown in Bay of Plenty. Proportionately more gold is grown outside of the region and there's been strong interest to grow it in the Nelson-Motueka area, Hawke's Bay-Gisborne, Te Kaha, parts of the Waikato and South Auckland.