A bounce back from last year’s fall in primary exports is being forecast by researchers at the Ministry for Primary Industries (MPI).
They say the 7% collapse in export values in the June 2024 year will be replaced by a 7% increase in the June 2025 year, thanks in part to a lower New Zealand dollar.
The total value of exports of farm, forestry, fishing and other products is forecast to reach $56.9 billion in the year to next June. That's up from $53.3 billion, and is the second highest level in five years.
The information comes in MPI’s latest Situation and Outlook for Primary Industries (SOPI) report on the food and fibre sector, and brought praise for “hard work and commitment” from the Minister of Agriculture Todd McClay.
The report says the coming good times are driven by stronger global demand and tighter global supplies for key commodities such as dairy, beef, mutton, and seafood products, as well as a slightly weaker New Zealand dollar against the greenback.
These trends are expected to offset elevated global uncertainty.
Along with their dollar value, food and fibre made up 81.1% of goods exports in the 2024 year, 12.4% of employment and 10% of Gross Domestic Product.
With a growth rate of 12%, horticulture is forecast to expand fastest in the 2025 year, followed by dairy, forestry, arable and seafood.
The SOPI report says there have been many problems for farmers such as the continued rebuild following cyclones Gabrielle and Hale, as well as drought and a tight supply of energy. Total input costs rose 20% in the two years to 2023, and although that process eased in the last year, the report says farm expenses remain high and farmers feel uncertain about the future.
“Newly elected governments in 2024 could introduce significant shifts in trade and fiscal policy. Further intensification of geopolitical tensions could weigh on trade and investment. These trends could affect long-term growth, threaten the resilience of supply chains, and create difficult trade-offs.”
The report also looks at global economic growth in the countries that New Zealand sells to and would like to sell more to. It quotes the International Monetary Fund forecasts of economic growth as remaining stable at 3.2% in 2025. However, that level of growth varies from country to country, with growth in India strongly outpacing other countries.
Global interest rates are falling and are predicted to fall further. Inflation is also coming under control in most markets.
The report discusses shipping costs, noting the cargo industry had barely got over the Covid crisis when attacks in the Red Sea disrupted shipping via the Suez Canal. These problems have made container hire costs highly volatile, with prices slipping 42% in the last few months, but still being far higher than pre-pandemic levels. Average commodity prices are rising with the dairy average up 21.4% in a year.
Overseas central banks have also begun cutting interest rates and are forecast to cut them further in the US, UK, Australia and the EU.
But China remains troubled by several challenges, including a property crisis as well as weak consumer and business confidence.
"Additionally, declining producer prices and a rise in inflation is squeezing the profits of manufacturing businesses
within China," the report says.
"On an annual basis, GDP rose by 4.6% in the three months to the end of September, the second quarter in a row that China’s official measure of economic growth has fallen below the 5% target."
"China’s position as a major importer means its sluggish economic and trade performance is likely to have a knock-
on effect on the global economy."
The report says China accounts for about 33% of food and fibre export revenue, and it hopes recent stimulus measures will boost confidence in the short to medium term.
Statistically, China earned the food and fibre sectors $16.8 billion, the US $16.5 billion and Australia $4.5 billion. The EU, Japan, South Korea and Taiwan were the next four. Dairy products were the big sellers, at a value of $23.2 billion, followed by meat at $11.3 billion.
The report also notes the rural Maori economy is performing strongly. It focuses on collective Maori assets, which are economic ventures run mainly by Iwi and hapu.
"In 2023, Māori collectives operating in the food and fibre sector had an asset base worth $19 billion, up from $14.1 billion in 2018. This is a 35% increase," it says.
"Māori collectives’ assets in sheep and beef farming increased by $100 million from $7.1 billion in 2018 to $7.2 billion in
2023. While sheep and beef remained the largest asset class, the biggest growth in the Māori collectives’ asset base in 2023 was seen in the horticulture, forestry, and dairy industries."
"Overall, this early data demonstrates the strong ongoing growth in the Māori food and fibre sector and in the wider Māori economy. It also suggests a shift towards higher-value land-use options that generate greater revenue such as horticulture and dairying and forestry."
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.