11 Jun 2013

MPI predicts some relief from the high dollar

6:42 am on 11 June 2013

The Ministry for Primary Industries is predicting some relief from the high New Zealand dollar which has been the bane of exporters.

In its latest situation and outlook report, the ministry said New Zealand's relatively strong economic performance and high interest rates will continue to underpin a strong dollar in the short term.

But MPI sector policy director Jarred Mair said the ministry expects to see some easing in the exchange rate in the next four years.

The situation and outlook report is forecasting a quick recovery for the dairy industry from drought conditions, with export returns growing by an average 8% a year on the back of stronger prices and increased production, to reach more than $17 billion by 2016-2017.

In contrast it sees further challenging times ahead for meat and wool with a further 9% drop in export earnings next year on top of this year's 10% fall, and a continuing decline in sheep and beef cattle numbers.

But some improvement are forecast in prices for lamb, beef and wool by 2017.

Horticulture export earnings are forecast to increase by almost 5% a year after next year, once the kiwifruit industry gets back on its feet from the PSA disease.

And MPI is forecasting steady growth in export demand and prices for logs although that will also put more pressure on local sawmillers.