Skip to content.
Updated at 7:04 am on 9 July 2012
Market analysts say recent dips in agriculture prices will not stop the sector from underpinning growth in the economy in the next couple of years.
Forsyth Barr says the sector will be the key driver of GDP growth in the coming years, building on increasing demand for food products in emerging markets, especially China.
It notes whole milk powder prices have fallen 18% in the past six months, while lamb prices are down 31%.
But it describes those changes as corrections and says prices have fallen from relatively high levels.
BNZ economist Doug Steel agrees, saying agriculture remains the backbone of the economy.
He says very strong grass growth coupled with good prices in the last 12 months have generated profitability throughout the agricultural sector.
But Mr Steel says to some extent, this has not filtered through to the wider economy yet, although it may come through in the next six to 12 months.
"At the same time though we think the next 12 months production-wise probably not going to be quite as good as what we've seen in the past season and international prices are clearly lower than what they were".
He says the debt situation in Europe is of serious concern but will affect growers and producers in varying ways.
Mr Steel says the conditions in Greece and Spain are not the same across the entire continent and Germany, for example, is still going relatively well.
He says a major negative for New Zealand exporters to Europe right now is the fact the NZ dollar - euro is now nudging 65 and well up on where it has been in the past.
"So that's certainly a head wind and in some ways just the transmission mechanism of the conditions in Europe that are obviously soft getting transmitted back here to New Zealand".
Copyright © 2012, Radio New Zealand
Audio is categorised based on the frequency of the programme it was heard in. Click on the headings below to access the programmes. For the most recently published audio, go to the latest audio page.
Streams are in Windows Media format. Mac and Linux users may need to install additional software. Get help with audio
A selection of music interviews, reviews, videos, concerts, sessions, and performances.
Downloads and podcasts are available for selected programmes. Our podcast page has a complete list of feeds.
Help on using online audio: formats, software, podcasts, downloading, and troubleshooting.