Kiwi biggest risk to govt forecasts for farm, forest exports   11 Jun 2012

Article - BusinessDesk

NZ dollar is greatest risk to government forecasts for farm, forest export growth

June 11 (BusinessDesk) – The risk of the kiwi dollar remaining higher than expected over the next four years is the biggest risk to government forecasts for growth in the nation’s farm, forestry and seafood exports, a new government report says.

The trade-weighted index is forecast to fall 8.4 percent to 64.7 by March 2016, with weakness against the Australian dollar and yen offsetting gains versus the greenback, pound and euro, according to the Ministry for Primary Industries 2012 situation and outlook report. The TWI was recently at 70.43.

If the decline doesn’t eventuate, revenue from dairy, meat, wool and forestry could be 20 percent below the ministry’s baseline assumptions, the report says.

“In the shorter term, weak European and US economic performance, and lower interest rates relative to New Zealand drive the assumed strength of the New Zealand dollar,” the report says. “Longer term, New Zealand’s high and growing level of international indebtedness is expected to be constrained by limits to lenders’ appetite for risk, eventually reducing the strength of the New Zealand dollar.”

The ministry’s baseline forecast is for the TWI to strengthen over the next nine months to reach 72.2 by March 2013. It would gradually ease back to 64.7 by March 2016. The kiwi dollar would be around 80 US cents by March next year, up from its current level of 77.69 cents, before easing back to 69 cents by 2016.

Among the nation’s biggest primary exports, fruit is forecast to show the biggest gain in gross revenue between now and 2016, rising 33 percent to $3.1 billion. Dairy, the biggest contribution to the nation’s overseas shipments, is forecast to lift revenue by 27 percent to $12.5 billion.

Cattle revenue would rise 13 percent to $2.5 billion and sheepmeat by 9 percent to $2.45 billion. Wool is the disappointment, with gross revenue forecast to decline 16 percent to $513 million. Among other commodity items, revenue from vegetables would rise 10 percent to $1.1 billion.

The forecasts show agriculture’s contribution to gross domestic product would rise to $12.2 billion by 2016 from an estimated $9.78 billion in the year ended March 31.

For the current 12 months ending June 30, dairy export sales are expected to rise 5.6 percent to $13.9 billion as strong production more than makes up for weaker global commodity prices.

“More than any other New Zealand primary industry, the dairy industry has ben able to tap into strong economic growth in emerging market economies,” the ministry says.

Meat and wool export sales would rise 5.8 percent to $7.2 billion, reflecting higher meat volumes and increased wool prices.

New Zealand’s primary industries have benefitted from increased trade ties with emerging Asia, most notably China, where “investment and private consumption remained strong because of China’s solid corporate profits and rising household income,” the ministry says.

“The outlook for New Zealand’s dairy and forestry exports depends to a large extent on the Chinese economy maintaining its momentum,” it says.

That contrasts with the European Union, where there is a risk of further economic deterioration, and the US, where a weak housing market is weighing on demand for forest products. South East Asian countries and Latin America are expected to continue to have stronger growth, it said.


Add a comment

Bookmark and Share


PM welcomes closer partnership with ASEAN

22 Nov 2015 News
New Zealand Government Rt Hon John Key Prime Minister 22 November 2015   PM welcomes closer partnership with ASEAN Prime ... more

Submissions open for United Nations report

20 Nov 2015 News
Minister for Women Louise Upston welcomes public consultation on a draft report for the United Nations outlining New Zealand’s... more


Increased Canterbury quake costs pushed Tower into the red

20 Nov 2015 Business News By Paul McBeth
Nov. 20 (BusinessDesk) - Tower, the general insurer, says it will report an annual loss next week after raising its provisioning for... more

NZ inflation expectations drift further below 2% mid-point

17 Nov 2015 Business News
Article - BusinessDesk   NZ inflation expectations drift further below 2% mid-point Nov. 17 (BusinessDesk) - Longer term ... more


Awards recognise NZ recreation's top performers

20 Nov 2015 Lifestyle
New Zealand’s recreation industry recognised 10 inspiring individuals and organisations at the New Zealand Recreation ... more

Villa Maria Proves a Huge Hit

16 Nov 2015 Lifestyle
VILLA MARIA PROVES A HUGE HIT TO OPEN SOVEREIGN TRI SERIES The Sovereign Tri Series for 2015/16 is underway with today’s... more


Auckland house price growth slows in Oct as new rules bite

4 Nov 2015 Property By Tina Morrison
  Auckland house price growth moderates in October as new rules introduced Nov. 4 (BusinessDesk) - Auckland house price growth... more

Tenancy bond system moves online

1 Nov 2015 Property
New Zealand Government 1 November 2015 A new tenancy bond service goes online today as part of the Government’s programme of... more


New migrant service launched for New Zealand and Australia

12 Oct 2015 Migration
Those looking for a sense of security when immigrating to New Zealand or Australia, need look no futher than the first inusrance... more

NZ's annual net migration reaches record 60,300 in August

21 Sep 2015 Migration
  NZ's annual net migration reaches record 60,300 in August on Indian, Chinese students By Jonathan Underhill Sept. 21... more


Australia's cloud passports only "conceptual" for now: DIA

29 Oct 2015 Travel & Tourism By Fiona Rotherham
Internal Affairs says Australia's cloud passports only "conceptual" for now   Oct. 29 (BusinessDesk) - The Department of... more

Auckland Airport a 'conductor' for New Zealand tourism: CEO

22 Oct 2015 Travel & Tourism By Fiona Rotherham
  Auckland Airport a 'conductor' for New Zealand tourism, CEO Littlewood says Oct. 22 (BusinessDesk) - Auckland International... more


Richie McCaw retires from rugby

19 Nov 2015 Sport
New Zealand Rugby Union Richie McCaw retires from rugby Richie McCaw has today confirmed he is hanging up his boot... more

Burling and Tuke on top at the mid-way mark

19 Nov 2015 Sailing
Yachting New Zealand Burling and Tuke on top at the mid-way mark at 49er World Champs Peter Burling and Blair Tuke have taken the... more


Gordon Campbell on why IS’s weakness makes it more dangerous

20 Nov 2015 Opinion By Gordon Campbell
Gordon Campbell on why Islamic State’s growing weakness makes it more dangerous One of the great things about writing online... more

Gordon Campbell on Islam and the Paris attacks

17 Nov 2015 Opinion By Gordon Campbell
According to polls, a third of Republican voters in Iowa want Islam to be criminalized. Unfortunately, the c... more

Kiwi Success

Cavalier promotes CFO Paul Alston to top job

20 Nov 2015 Appointments
Article - BusinessDesk   Cavalier promotes CFO Paul Alston to top job By Paul McBeth Nov. 20 (BusinessDesk) - Cavalier Corp, the... more

Employment Court Judge appointed

20 Nov 2015 Appointments
New Zealand Government Hon Christopher FinlaysonAttorney-General 20 November 2015 Kerry Smith, barrister and solicitor of... more


UPDATE: Weaker employment adds to rate-cut case

4 Nov 2015 Recruitment By Johnathan Underhill
Article - BusinessDesk   UPDATE: NZ employment falls in third quarter, adding to case for further RBNZ rate cut (Recasts to... more

Unemployment rises 0.1 per cent

4 Nov 2015 Recruitment
The latest Household Labour Force Survey (HLFS) has reflected the softening of the economy in the first half of the year, with an... more