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.

(BusinessDesk)

Add a comment

Bookmark and Share

News

First steps taken towards flag referendum

29 Oct 2014 News
New Zealand Government Rt Hon John KeyPrime Minister Hon Bill EnglishDeputy Prime Minister 29 October 2014 Cabinet has agreed on the... more

NZ to join global crackdown on tax evasion

29 Oct 2014 News
Revenue Minister Todd McClay today announced New Zealand’s timetable for participation in a global automatic exchange of... more

Business

NZ dollar holds gains as traders await central bank meetings

28 Oct 2014 Business News
By Paul McBeth Oct. 28 (BusinessDesk) - The New Zealand dollar held gains in the local trading session as traders remain cautious... more

Orion Health seeks up to $150mln, eschews forecasts

28 Oct 2014 Business News
By Fiona Rotherham Oct. 28 (BusinessDesk) - Orion Health Group, which develops software systems for patient health management, wants... more

Living

Duo wins MKR NZ by just one point

29 Oct 2014 Food & Wine
Neena and Belinda have won the first season of My Kitchen Rules New Zealand. The "Modern Day Hippies" beat Aaron and Heather in... more

MKRNZ - The WeedEaters are cleaning up

28 Oct 2014 Food & Wine
Modern Day Hippies Neena and Belinda breezed through the semi finals last night on My Kitchen Rules New Zealand and no one could be... more

Property

Goodman Property sells three Christchurch sites for $18.9M

28 Oct 2014 Property
By Suze Metherell Oct. 28 (BusinessDesk) - Goodman Property Trust, the biggest listed property investor by market value, sold two... more

Double-digit rate increases loom

24 Oct 2014 Property
Aucklanders living in the ‘hottest suburbs’ could be the big losers, while businesses will come out winners Rate rises... more

Migration

New Zealand Named The Best Place For Raising Children

24 Oct 2014 Migration
New Zealand has been named the best place to raise a child in the Raising Children Abroad annual league table. According to the HSBC... more

Desperate employers keeping overstayers

24 Oct 2014 Migration
Desperate employers seeking to fill job shortages are keeping migrant workers who previously held a work visa in New Zealand... more

Travel

Air New Zealand's GENIUS Hobbit themed safety video

24 Oct 2014 Travel & Tourism
Giving flyers an Unexpected Journey! Elijah Wood and Sir Peter Jackson star in 'epic' Hobbit themed Air New Zealand safety video Air... more

Travel 'interns wanted' to tour 2000km of NZ

24 Oct 2014 Travel & Tourism
Forget a summer internship of fetching coffee and photocopying - a travel company is offering a $30,000, 10-day, 2000km tour of New... more

Sport

NZ Rugby League: Matagi to debut against Samoa

29 Oct 2014 Rugby League
Vodafone Warriors prop Suaia Matagi is poised to play his first test for the NZ Kiwis against his old team-mates, Toa Samoa, at... more

Cancer Society named official charity for Cricket World Cup

28 Oct 2014 Cricket
ICC Cricket World Cup 2015 Cancer Society named official charity in New Zealand for ICC Cricket World Cup 2015 The Cancer Society has... more

Columns

The return of Occupy London: this time it’s truly political

28 Oct 2014 Opinion
Article - Adam Parsons The return of Occupy London: this time it’s truly political by Adam Parsons22 October 2014more

Gordon Campbell on the TPP finishing line, and Amazon’s woes

28 Oct 2014 Column
Column - Gordon Campbell Gordon Campbell on the TPP finishing line, and Amazon’s woes by Gordon Campbell If the Trans Pa... more

Kiwi Success

New Ambassador to France appointed

28 Oct 2014 Appointments
Minister of Foreign Affairs Foreign Minister Murray McCully has appointed diplomat James Kember as New Zealand’s next... more

Jim Hickey hangs up his umbrella

24 Oct 2014 People
Veteran weathercaster Jim Hickey has announced his retirement today, saying is was a tough decision. "I feel like I'm subbing off at... more

Recruitment

More than 600 take up 3K to Christchurch jobs

28 Oct 2014 Recruitment
Social Development Minister Anne Tolley says the Government’s 3K to Christchurch scheme is a winner with 633 unemployed people... more

UK ambulance service poaches Kiwi paramedics

24 Oct 2014 Recruitment
New Zealand paramedics are being poached by Britain's busiest ambulance service. Interviews were held in Auckland on Friday and... more