29 Jul 2009

Primary producers coping well with recession - ministry

8:18 am on 29 July 2009

The country's primary sector is getting through the recession relatively well, the Ministry of Agriculture and Forestry says.

The ministry's annual outlook, published on Tuesday, predicts increasing returns for forestry, meat and dairy producers over the next three to five years.

The report says while demand in established European markets will weaken as consumers spend less and governments erect trade barriers.

Markets in developing countries in Asia will pick up the slack and New Zealand's primary producers need to be ready to respond, the study says.

In the crucial dairy industry, which accounts for 27% of exports, the ministry expects the average payout to farmers to remain between $5 and $6 per kilogram of milk solids until 2013.

The ministry's report says New Zealand has and will continue to benefit from a world that still needs feeding and is facing steady population growth.

MAF director-general Murray Sherwin says the lamb prices have been supported by a drop in availability, due to drought and dairy conversions.

Demand has increased for lower value beef, which forms a large proportion of New Zealand's production, but has softened for prime cuts.

Mr Sherwin says the dairy sector has shown the most visible effects of the recession. The ministry is predicting a lean 2010 season, followed by an increase in milk payouts and overall export value.