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

Archives New Zealand to rebuild Christchurch facility

22 May 2015 News
22 May 2015 The Budget confirms $6.1 million in operating funding over the next four years and $13 million of capital funding from... more

Budget 2015: At a Glance

21 May 2015 News
21 May 2015 Budget 2015 delivers careful management of public spending, hand in hand with investment in public services. (All... more

Business

NZ consumer confidence slips in May

22 May 2015 Business News By Tina Morrison
May 22 (BusinessDesk) - New Zealand consumer confidence slipped in May as sentiment about current and future conditions eased. The... more

Consumer NZ vs Qantas

20 May 2015 Business News
Article - BusinessDesk   Consumer NZ ramps up campaign to get Qantas's Jetstar to drop pre-ticked booking forms May 20... more

Living

Britain remembers the ANZACs - 100 years on

25 Apr 2015 ANZAC By Charlotte Everett
100 years after allied forces landed in Gallipoli, 25 April – ANZAC Day – has been commemorated in the UK officially for... more

A Kiwi's guide to ANZAC in Europe - our list of events across the UK, Ireland and beyond

24 Apr 2015 ANZAC By Charlotte Everett
Tomorrow marks the 100th ANZAC Day, and if you are a Kiwi or Aussie far from home there are plenty of events on to enable you both to... more

Property

New guidance on home construction

22 May 2015 Property
Building and Housing Minister Dr Nick Smith today released at the Certified Builders’ Association conference in Christchurch... more

Goodman Property lifts FY earnings 5.4% on revenue growth

20 May 2015 Property By Paul McBeth
  Goodman Property lifts FY earnings 5.4% on revenue growth, cost clamp down May 20 (BusinessDesk) - Goodman Property Trust,... more

Migration

Migrant exploitation Bill passed

30 Apr 2015 Migration
The Immigration Amendment Bill (No 2) which cracks down on employers who exploit migrant workers passed its final reading in... more

NZ migration hits new annual record in March

23 Apr 2015 Migration By Tina Morrison
April 23 (BusinessDesk) - New Zealand migration hit a new annual record in March, as more students arrived from India and China and... more

Travel

Two new tourism projects to receive funding

20 May 2015 NZ Tourism
  Prime Minister and Tourism Minister John Key has today announced the Government is investing in two new tourism projects in... more

Chinese tourists to NZ turning off package tours

19 May 2015 NZ Tourism By Anna Lu
May 19 (BusinessDesk) - China’s tourism market, which is officially expected to be worth over $2.6 billion to New Zealand by... more

Sport

BLACKCAPS tour of England: First Test at Lord's Cricket Ground

22 May 2015 Cricket
First innings at stumps on Day One: England 354-7 in 90 overs (Root 98, Stokes 92, Buttler 67, Ali 49*; Henry 3-93 on Test debut) DAY... more

Critical Moments Will Count For Mojo Pulse

22 May 2015 Netball
Assistant Coach Frances Solia is hoping for a repeat result when the Mojo Pulse come up against the Waikato Bay of Plenty Magic in... more

Columns

Gordon Campbell on Budget 2015

22 May 2015 Opinion By Gordon Campbell
From the outset, the slogan for yesterday’s Budget - “The Plan Is Working” – begged to be mocked.... more

Gordon Campbell Key’s abuse of secrecy over Iraq & The TPP

30 Apr 2015 Opinion By Gordon Campbell
  For the past week or so we’ve been hearing a lot about the child-like side of our Prime Minister. So I guess we... more

Kiwi Success

New High Commissioner to Tonga

15 May 2015 Appointments
Foreign Minister Murray McCully has today announced diplomat Sarah Walsh as New Zealand’s new High Commissioner to... more

IkeGPS's CEO Milnes and CTO Toorenburg move to US

15 May 2015 People By Suze Metherell
  IkeGPS's CEO Milnes and CTO Toorenburg move to US to chase growth May 15 (BusinessDesk) - IkeGPS, the remote measurement... more

Recruitment

NZ's growing ICT sector drives more diverse economy: Joyce

15 May 2015 State of the Market Report By Paul McBeth
  NZ's growing ICT sector drives rapid economic diversification, Joyce says May 15 (BusinessDesk) - New Zealand's information... more

5,500 more doctors and nurses in our hospitals

15 May 2015 Recruitment
  Health Minister Jonathan Coleman says a record number of doctors and nurses are working in District Health Boards across the... more