15 Jun 2017

Annual primary sector exports to hit record high

5:27 pm on 15 June 2017

The government is forecasting primary sector exports to grow by over 9 percent in the coming year to $41 billion.

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The record high in exports is being driven by forecasted strong dairy prices. Photo: RNZ / Cosmo Kentish Barnes

The Ministry for Primary Industries released its 2017 'situation and outlook' report this morning at the National Fieldays.

By June next year the ministry is expecting agricultural exports to lift to over $41bn, driven by the forecast that dairy prices are likely to remain near current levels and stay over $6 a kilogram for milk solids.

This would push dairy export values to $17.3bn. However, this will be from similar cow numbers; the report is picking dairy cow numbers to still be at about 5.2 million in a year's time and for the milk solid volumes to rise to 1.8 billion kilograms.

Minister for Primary Industries Nathan Guy said the report was encouraging for the sector, especially since it had not been an easy year for farmers.

"We've had droughts, we've have flooding, we've had two cyclone events, we've had the massive Kaikōura earthquake event.

"It's been a challenging year but our primary sector is in really good shape. It's grown about 2.5 percent to $38bn [in the past year]."

Nathan Guy announcing the innovation awards at the National Fieldays.

Nathan Guy announcing the innovation awards at the National Fieldays. Photo: RNZ / Alexa Cook

Meat and Wool fall from 2016 peak

In the past year production and export volumes for meat and wool exports have fallen, and the ministry was expecting 2017 exports to drop by almost 9.8 percent to $8.3bn.

Wool export revenue has fallen 28 percent since June last year to $550m - driven by a lack of demand from China.

Mr Guy said the wool market was not strong.

"It's just too low, it's very stubborn at the moment. I don't think there is a silver bullet around the corner for our sheep farmers.

"Many of them are grumbling to me saying the cost of taking the fleece off versus the return is pretty depressing."

The ministry will keep working on better market access and primary growth partnerships to try and get farmers better returns, Mr Guy said.

The report was forecasting a positive outlook for forestry and horticulture.

Strong forestry and dairy prices, combined with increasing production of apples, wine, and kiwifruit have underpinned growth for the year ending June 2017.

Dairy prices for most products are forecast to remain at or near current levels as global demand and supply rebalance, while high forestry prices will continue to encourage record harvest levels."