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Pita Alexander lays out the state of the agribusiness sector. He says the new Government needs to make some hard decisions early on - deferring hard decisions is what the bottom group in every sector do

Rural News / analysis
Pita Alexander lays out the state of the agribusiness sector. He says the new Government needs to make some hard decisions early on - deferring hard decisions is what the bottom group in every sector do

The following very useful Note was released by Alexanders, a Christchurch accounting firm that specialises in advice for agribusinesses. We thank them for permission to repost it.


1. Total food and fibre exports for the 2023 year ended: $57.4 billion.

2. Percent of total New Zealand merchandise trade from food and fibre: 81.8%.

3. New Zealand actual export revenue for the year ended 31 March 2023:

Dairy $25.425 billion 44.3%
Meat and Wool $12.375 billion 21.6%
Forestry $6.685 billion 11.6%
Horticulture $7.064 billion 12.3%
Seafood $2.007 billion 3.5%
Arable $0.242 billion 0.4%
Processed Food and Other Products $3.602 billion 6.3%
  -------- ------
  $57.4 billion 100%

4. Top 10 export countries in the 2023 year:

China $19.191 billion 33.4%
USA $5.842 billion 10.2%
Australia $4.848 billion 8.5%
EU (excl. UK) $3.709 billion 6.5%
Japan $3.099 billion 5.4%
South Korea $1.883 billion 3.3%
Indonesia $1.845 billion 3.2%
Taiwan $1.523 billion 2.7%
Malaysia $1.257 billion 2.2%
Thailand $1.206 billion 2.1%
Other Destinations $12.997 billion 22.7%
  -------- ------
  $57.4 billion 100%

5. Percent of exports to China of New Zealand total in the 2023 year:

    Rank
Forestry 54% (No 1)
Meat and Wool 37% (No 1)
Seafood 36% (No 1)
Dairy 34% (No 1)
Processed Food 19% (No 2)
Horticulture 14% (No 3)
Arable 6% (No 4)

6. Percent of exports to Australia of New Zealand total in the 2023 year:

    Rank
Processed Food 37% (No 1)
Seafood 14% (No 3)
Horticulture 13% (No 4)
Arable 12% (No 2)
Forestry 10% (No 2)
Dairy 5% (No 3)
Meat and Wool 3% (No 5)

7. Percent of exports to USA of New Zealand total in the 2023 year:

    Rank
Meat and Wool 20% (No 2)
Horticulture 16% (No 1)
Seafood 15% (No 2)
Arable 9% (No 3)
Processed Food 8% (No 3)
Forestry 6% (No 4)
Dairy 5% (No 4)

8. Estimated overall financial effects of Cyclone Gabrielle on food and fibre in the 2023 year:

Apples and Pears $875 million
Forestry $375 million
Vegetables $250 million
Sheep, Beef and Deer $250 million
Dairy $150 million
Other Fruit $150 million
Wine $50 million
  ------------
  $2.1 billion

9. Estimated food and fibre export revenue for the year to end 30 June 2027:

Dairy $28.250 billion
Meat and Wool $11.920 billion
Horticulture $8.630 billion
Forestry $7.330 billion
Seafood $2.350 billion
Arable $0.260 billion
Processed Food and Other $3.290 billion
  --------------
  $62.030 billion

Note:

This $62.030 billion estimate is an increase on the 2023 year actual figure ($57.4 billion) of $4.630 billion or 8.07% - this represents over the four years an annual compound increase of 1.96%.

10. Peak New Zealand inflation rate was 7.2% at 30 September 2022 - is approximately 5.6% at 31 October 2023 - the USA at 31 October 2023 is 3.2%.

11. Number of New Zealand people employed directly and indirectly in the food and fibre sector: Approximately 360,000, which is around 12.3% of the total New Zealand labour force.

12. Increase in New Zealand consumer food prices over the year ended 30 April 2023: 12.5%.

13. Increase in New Zealand farm expenses price index from March 2022 to March 2023: 11.7%.

14. Key farm price increases were interest 51.6% and fertiliser 13.3% relative to the previous point.

15. Over the last 9.5 years the New Zealand Dollar has weakened relative to the USA Dollar by 31% - that is from $0.8675 in April 2014 to $0.5988 on 17 November 2023 - a $10,000 USD holiday in the USA at the present time would cost just on $16,000 NZD today.

16. Fonterra actual payouts for the last 15 years (per kg of milk solids):

Year Milk Dividend Total  
2009 year 4.75/kg $0.45/kg $5.20/kg
2010 year $6.10/kg $0.27/kg $6.37/kg
2011 year $7.60/kg $0.30/kg $7.90/kg
2012 year $6.08/kg $0.32/kg $6.40/kg
2013 year $5.84/kg $0.32/kg $6.16/kg
2014 year $8.40/kg $0.10/kg $8.50/kg
2015 year $4.40/kg $0.25/kg $4.65/kg
2016 year $3.90/kg $0.40/kg $4.30/kg
2017 year $6.12/kg $0.40/kg $6.52/kg
2018 year $6.69/kg $0.10/kg $6.79/kg
2019 year $6.35/kg $0.00/kg $6.35/kg
2020 year $7.14/kg $0.05/kg $7.19/kg
2021 year $7.54/kg $0.20/kg $7.74/kg
2022 year $9.30/kg $0.20/kg $9.50/kg
2023 year $8.22/kg $0.50/kg $8.72/kg
  ---------- ---------- ----------
15 year Average $6.56/kg $0.26/kg $6.82/kg

17. Estimated dairy stock and production:

  Actual Estimates
  30 Jun 23 30 Jun 27
     
Cows and Heifers in Milk $4.78 million $4.71 million
Milk Solids Production 1,865,000 kg 1,906,000 kg Milk
Solids per Average Cows Milked 390 kg 405 kg
Milk Solids Payout $8.28/kg $9.40/kg

Notes:

  1. An estimated drop in cows in milk of 700,000 (14.64%).
  2. An estimated increase in production of 410,000 kg (2.2%).
  3. An estimated increase in kilograms per average cows milked of 15 kg (3.84%).

18. New Zealand actual and estimated meat and wool exports

Year Ended    
30-Jun-19 Actual $10.176 billion
30-Jun-20 Actual $10.617 billion
30-Jun-21 Actual $10.373 billion
30-Jun-22 Actual $12.310 billion
30-Jun-23 Estimate $11.940 billion
30-Jun-24 Estimate $11.440 billion
30-Jun-25 Estimate $11.510 billion
30-Jun-26 Estimate $11.700 billion
30-Jun-27 Estimate $11.920 billion

Note:

The 2027 year increase from the 2019 year is 17.13% - over the eight years this represents an annual compound increase of 2%.

19. New Zealand actual and estimated meat and wool export split:

  2019 (Actual) 2027 (Estimate)
Beef and Veal $3,324 million $4,420 million
Lamb $3,227 million $3,300 million
Mutton $576 million $590 million
Wool $549 million $450 million
Venison $186 million $160 million
Other Meat $610 million $700 million
Hides and Skins $354 million $260 million
Animal Co-Products $729 million $990 million
Animal Fats and Oils $115 million $300 million
Animal Products for Feed $376 million $650 million
Carpet and Wool Products $130 million $100 million
  --------------- ---------------
  $10.176 billion $11.920 billion

20. Ten major New Zealand meat and wool export destinations for the year ended 31 March 2023:

China $4,602 million
USA $2,441 million
EU (excl. UK) $1,543 million
Japan $551 million
UK $413 million
Australia $381 million
South Korea $356 million
Taiwan $313 million
Canada $272 million
Indonesia $176 million
Other Destinations $922 million
  ---------------
  $11.940 billion

21. New Zealand five year average sheep and beef farm profitability to 30 June 2022: $162,315,
       estimated for 2023 year: $146,300 per farm - will be significantly lower for the 2024 year.

22. Sheep and cattle numbers - actual and estimated:

  Actual
2019
Actual
2023
Estimated
2027
(a) Beef Cattle 3.9 million 3.8 million 3.6 million
(b) Dairy Cattle 6.3 million 6.1 million 6.0 million
(c) Sheep 26.8 million 24.9 million 23.2 million
(d) Deer 800,000 700,000 700,000
(e) Breeding Ewes (1) 16.8 million 15.4 million 14.5 million
(1) Included in total sheep numbers in line (c).

23. Estimated overall sheep numbers in Australia at 30 June 2023: 79 million.

24. Estimated New Zealand shearing costs per head in 2024 year: $6.15 per head.

25. New Zealand strong wool (above 31.4 microns) constitutes 71% of New Zealand wool processed for export.

26. Estimated horticulture export revenue in the year to end 30 June 2027:

Kiwifruit $3.75 billion
Wine $2.60 billion
Apples and Pears $0.92 billion
Fresh and Processed Vegetables $0.81 billion
Other Horticulture $0.55 billion
  --------------
Total Export Value $8.630 billion

 

27. Comments from an accountant's desk:

  1. New Zealand exports of technology of various kinds is now around $11.5 billion and is around 14% of New Zealand total export income. This sector employs 63,000 people.
  2. Another key export industry is personal and business travel.
  3. One of New Zealand's weaknesses is its poor productivity record - working more hours is not productivity as measured but it is what many New Zealand people do - such as the writer.
  4. The New Zealand Government tax take from dairy, sheep and beef is going to be lower than they have budgeted for in the 2024 year and probably also the 2025 year at this point.
  5. The pathway/direction of forestry planting in New Zealand for carbon farming effectively is confusing and needs more focus and involvement of key parties in the forestry and farming camps.
  6. The tax take from New Zealand agriculture is much smaller than might be anticipated even in a so-called normal year, but their contribution towards New Zealand exports is a quite different story.
  7. The new New Zealand Government needs to make some hard decisions early on - deferring hard decisions is what the bottom group in every sector do.

 

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14 Comments

Great statistical summary.  Thanks for the re-post interest.co.nz.

 

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It's a great list, and I will refence it from time to time.

But it is missing the two most important figures; calories in and calories out.

And essential portion of the former (as I keep trying to get into the conversation) is from a finite resource. The question are then: How long will that keep going? And: how do we do 'calories out' beyond that? 

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Exactly PDK, it isn't the land providing the produce and income as it has only a very limited supply of nutrients.

NZ AG is based on imported NPKS particularly phosphate. These nutrients are imported from countries as far away as Morocco Nth Africa.

As the price goes up for these nutrients the viability of farms to produce becomes harder without subsidies. And who pays the subsidies?

 

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I wonder what sort of overlap there is with what we import. 

I.e pork, poultry (?) etc . 

Bananas,off season apples , pineapples,oranges dried food  etc. 

tea coffee , condiments processed food . 

fertiliser and animal feed . 

Would be interesting to know the balance. 

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Yeah solarb , the food import comparison to exports would be interesting. It seems NZ struggles to provide a full year around diet from our own land resource for the present population. Probably due to the lack of cropping land.

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Thanks Hans .

I think there used to be a lot more cropping land around Marton etc, if only as a rotation with sheep . the old mixed farm in school c geography.  i would have thought Covid supply problems would have taught us to be at least minimally self sufficent .

Crops like quinoa seem promising, and would be a good ingredient in Fart (plant based ) burgers.  

 

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Quinoa might stack up when it is a niche product but if it is mass produced do the numbers stack up? 

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This is always the problem Ag Man, traditional crops we need are hard to produce in NZ so we are stuck with heaps of protein.

I have never tried quinoa knowingly so can't say if it is good or not. I do agree that it is unlikely to make the list of wanted items on the global dietary list.

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So we are just as reliant on agriculture as we've always been, and probably always will be - nz for jobs and incomes, the world for food.

Carbon farming productive land to address the impact of fossil fuels is madness.

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Especially when the production of CO2 is somewhere between irrelevant and desirable (ie. from a greening-the-planet point of view).  NZ's reliance on low cost (ie. low EROEI) fossil fuel is the more worrisome aspect that nobody seems to care about.

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Sobering numbers.  Great collection, thanks.

I read the increases in production per cow as productivity increases?   Less cows, more milk.

As a former small scale sheep and beef farmer, I remember the confusing signals as we thought carefully about what we needed to do about strong wool.  So carefully that, as Pita observes, this industry was in the lower quarter, did nothing, now a remnant.

Who also remembers the hype around the change in the diary industry lead by a member of a professional organization that Pita and I were members of?  

Compared to Hort, it seems our pastoral sector is less well managed.  But this collection shows it is still the pastoral sector with the big numbers.   Big thinking is needed, asap.

As we struggle with our deficit in infrastructure, cynically I could say that the poor policy from central government to support the primary sector, in fact the disdain it is held, will assist NZ meet it's global warming targets.  If it becomes uneconomic to farm, I guess we won't earn the overseas funds, so won't have the imports.  Suddenly we are clean and green?   Pass me my knitting neddles, the emperor needs new clothes.

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Good data

When you break it down in the last 2023 figures (land area from Stats NZ)

Export Revenue per ha      Land used

Dairy                 $11,557       2.2mill ha

Meat and Wool $1,820         6.8mill ha

Forestry            $4,178         1.6mill ha

Horticulture       $53,515        132k ha

IT                       Massive        might be 200ha if lucky

Since 2002 land area by landuse has changed (Stats NZ)

Dairy                     + 1 million ha

Meat and wool      - 2.9 million ha

Forestry                - 200k

Horticulture           +23k

Where has all the 1.9 million ha other meat and wool land gone after Dairy?? - my guess is mainly native reversion and some Tenure review.

Looking at the 2027 export forecasts - difference to 2023

Dairy                        + 2.8 billion

Meat and Wool         - 450k

Forestry                    + 650k

Horticulture               + 1.6 billion

IT                               ??? But I would say a lot more

Income per person employed in 2023

All Primary Sector - $159,000

IT sector - $182,000

The trend is clear.

Watch the IT sector -  it will only keep getting bigger - bets on how long before it overtakes Dairy??

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Trouble is we've been watching the IT sector for years and still dairy is top of the tree. I would have thought the $ difference per employed would have been way more than $20k, but then lucky you didn't add in tourism just for laughs.

I'm not pro dairy even though it's what I do. But I am cynical that there is something out there to earn NZ more as I've been waiting my whole life.

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Well you never know but at the end of the day we need them both - I'm not anti dairy just pointing out where things are trending and the rise of IT - Tech has done this around the world and whos to say it will continue? maybe something else  - I dont know.

Hort and Dairy look like the big gainers going forward as well.

What these numbers don't show is what is the cost associated with producing this income? - I would guess that tech has a much lower input cost - apart from labour.

Thats the key really all good selling something but is there anything left after costs - if not you are better to stop, or will be forced to by going broke!!

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