The Country
  • The Country home
  • Latest news
  • Audio & podcasts
  • Opinion
  • Dairy farming
  • Sheep & beef farming
  • Rural business
  • Rural technology
  • Rural life
  • Listen on iHeart radio

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • Coast & Country News
  • Opinion
  • Dairy farming
  • Sheep & beef farming
  • Horticulture
  • Animal health
  • Rural business
  • Rural technology
  • Rural life

Media

  • Podcasts
  • Video

Weather

  • Kaitaia
  • Whāngarei
  • Dargaville
  • Auckland
  • Thames
  • Tauranga
  • Hamilton
  • Whakatāne
  • Rotorua
  • Tokoroa
  • Te Kuiti
  • Taumurunui
  • Taupō
  • Gisborne
  • New Plymouth
  • Napier
  • Hastings
  • Dannevirke
  • Whanganui
  • Palmerston North
  • Levin
  • Paraparaumu
  • Masterton
  • Wellington
  • Motueka
  • Nelson
  • Blenheim
  • Westport
  • Reefton
  • Kaikōura
  • Greymouth
  • Hokitika
  • Christchurch
  • Ashburton
  • Timaru
  • Wānaka
  • Oamaru
  • Queenstown
  • Dunedin
  • Gore
  • Invercargill

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / The Country

Primary export revenue set to fall

Brian Fallow
By Brian Fallow
Columnist·NZ Herald·
11 Jun, 2012 05:30 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Revenue from forestry exports is predicted to remain steady at about $4.5 billion before rising to $5.3 billion a year by 2016. Photo / NZPA

Revenue from forestry exports is predicted to remain steady at about $4.5 billion before rising to $5.3 billion a year by 2016. Photo / NZPA

Export revenues from the primary sector are expected to decline during the year ahead because of falling prices, the Ministry for Primary Industries says.

In its annual overview and forecasts, it says the impact of a high New Zealand dollar has been mitigated by strong product prices for most primary industries - horticulture and wood processing being the main exceptions.

But world prices for dairy products, meat and forest products have been falling for a year now and the exchange rate has provided only a limited offset.

The ministry's forecasts rely on the Treasury's assumptions for the exchange rate, which are that it will remain about where it is on a trade-weighted basis for the coming year then depreciate by about 12.5 per cent by 2016.

If it does not, and stays high, the ministry estimates that dairy export revenue would be 21 per cent lower than its baseline forecasts by 2012, meat and wool revenues 22 per cent lower and forestry exports 21 per cent lower.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

In the latest season volumes have been boosted by exceptionally good growing conditions, horticulture again excepted, which by definition cannot be assumed to continue. Dairy production jumped 10 per cent in the year just ended, of which a quarter was through increased stock numbers and three-quarters because of higher productivity per cow.

Deputy director-general Paul Stocks said, assuming reasonably good growing conditions, production was forecast to rise about 2 per cent a year, with a similar 3:1 split between productivity and stock number gains.

However, the milk price is expected to drop 35c a kilogram of milk solids or 6 per cent in the season ahead before recovering to be 29 per cent or $1.75 a kilogram higher by 2016.

Advertisement
Advertise with NZME.

As a result of static production, a sticky exchange rate and lower prices, dairy export revenue is forecast to drop 9 per cent to $12.6 billion in the year ahead.

Beef demand is good, assisted by drought in the United States which reduced inventory levels to their lowest since 1952.

The ministry forecasts beef export prices will remain high in the year ahead - at least in US dollar terms - because of tight supply in the US market.

Beyond that it expects lower feed grain prices and increased exports from Australia and the US to take a toll of New Zealand export prices, though they would remain higher than before 2011, reflecting rising incomes and demand for protein in Asian markets.

Discover more

Agribusiness

High NZ dollar biggest risk to farm, forest exports

10 Jun 11:00 PM
Economy

No biosecurity fall, Minister promises Fieldays

13 Jun 02:00 AM
Agribusiness

Primary sector revenue dips

23 Jul 10:30 PM

A 22 per cent rise in lamb prices in the British market had spurred higher production elsewhere, including Australia.

Wool production has dropped slightly, reflecting lower sheep numbers, but the construction boom in China had boosted demand for strong wools for carpet, and though prices are easing it is from historic highs.

Forestry exports are expected to remain steady at around $4.5 billion. over the year ahead before rising to $5.3 billion by 2016.

DAIRY PRICES WELL DOWN FROM PEAK

Global dairy prices have fallen sharply from their peaks, under the weight of increased production. They have dropped 28 per cent since March last year, according to ANZ's commodity price index.

But in a research note on the sector, Goldman Sachs economist Philip Borkin points to evidence that demand in emerging markets remains firm, and to the fact that New Zealand dairy farmers are unlikely to immediately enjoy again the excellent growing conditions of last season, as factors that will eventually put a floor under international prices and contribute to a recovery.

Advertisement
Advertise with NZME.

"Nevertheless the damage to prices has been done and we forecast the milk price component of the dairy payout to be $5.40 a kilogram of milk solids for 2012/13, the lowest since 2008/09, before recovering to $6.70 for 2013/14."

The sharp fall in 2008/09 triggered a large retrenchment in spending by farmers, and a 19 per cent fall in rural land prices.

But while dairy farmers face a challenging year, Borkin does not expect the impact to be nearly as great as it was then. Largely because of lower interest costs, farm expenses are now considerably smaller as a percentage of income, in cash terms, at 59 per cent against 69 per cent in 2008/09.

Save

    Share this article

Latest from The Country

Premium
The Country

'It was my calling': Inside the Taupō farm taming wild horses

20 Jun 10:00 PM
The Country

'Rusty but running': 1940s bulldozer still going strong

20 Jun 05:00 PM
The Country

One dead, three injured in Central Otago ATV accident

20 Jun 02:29 AM

Jono and Ben brew up a tea-fuelled adventure in Sri Lanka

sponsored
Advertisement
Advertise with NZME.

Latest from The Country

Premium
'It was my calling': Inside the Taupō farm taming wild horses

'It was my calling': Inside the Taupō farm taming wild horses

20 Jun 10:00 PM

There are 93 horses still facing an uncertain fate.

'Rusty but running': 1940s bulldozer still going strong

'Rusty but running': 1940s bulldozer still going strong

20 Jun 05:00 PM
 One dead, three injured in Central Otago ATV accident

One dead, three injured in Central Otago ATV accident

20 Jun 02:29 AM
Tonnes of promise: Angus Bull Week set to make millions

Tonnes of promise: Angus Bull Week set to make millions

20 Jun 12:00 AM
Help for those helping hardest-hit
sponsored

Help for those helping hardest-hit

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP