Meat and wool exports down

Minister for Primary Industries Nathan Guy. Photo / John Borren

Falling volumes are forecast to push meat and wool exports down to $8.2 billion in the year ending June this year.

That was a 9.6% drop from the previous year and $40million lower than the previous forecast in December last year, a new quarterly update of the Ministry for Primary Industries' Situation and Outlook for Primary Industries said.

The main driver behind the fall in meat revenue was an expectation fewer dairy cows would be culled this season compared with the previous two years. Overall, lower livestock numbers indicated slightly lower production volumes for beef and sheep meat, partly offset by higher prices.

Primary sector exports were forecast to total $37.5billion for the year ending June, up $0.8billion from the previous December forecast. Next year, exports were expected to grow to $41billion.

Primary Industries Minister Nathan Guy said sectors such as forestry and horticulture continued to do well and it was pleasing to see dairy on the rebound after a tough few seasons.

This year was likely to be more challenging for the sheep meat sector because of market volatility and the UK's exchange rate fluctuations.

Dairy export revenue was forecast at $14.5billion for the year ending June 2017, up $1.2billion from the June 2016 year as global prices continued to recover.

That forecast had been revised upward from the December update by nearly $0.8billion, largely due to strong export volumes in the December 2016 quarter.

A production recovery, coupled with an expectation dairy prices would stabilise near current levels, drove the dairy export revenue forecast up to $16.8billion for the year ending June 2018.

Wool export revenue was forecast to fall 19% to $620million in the year ending June 2017, as exports continued to suffer from a lack of demand, particularly from China.

China was the largest destination country for New Zealand wool but, over the past year, exports were down 33%, the report said.

The Kaikoura earthquake in November had a significant impact on primary industries, mostly through damage to buildings and infrastructure.

The wine industry faced the largest impact. Many storage tanks and processing facilities were damaged. About 2% ($38million) of the 2016 harvest was lost as a result of damage to storage tanks, and about 60million litres of storage capacity in Marlborough was impaired in some way.

Some business interruption losses were likely to have occurred but had been moderated by the use of temporary storage and processing solutions. There was also less pressure on storage capacity, as variable weather conditions during flowering translated into lower 2017 yields in Marlborough than previously forecast.

The earthquake also affected pastoral farmers in the Kaikoura and Hurunui regions and some dairy farmers had to dump milk for up to three weeks after the earthquake.

The most significant impact to sheep, beef and dairy operations was expected to be related to damage to homesteads, milking sheds, farm roads and fencing.

Kaikoura and eastern Marlborough's paua and rock lobster fisheries were also disrupted and many other primary industry businesses would also have been affected by the quakes, although the impacts were more difficult to quantify.

For example, about 13% of New Zealand's honey crop came from the Canterbury-Kaikoura region and some hives might have been destroyed by landslides, the report said.