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

Maori Battalion’s legacy to be preserved

2 Sep 2014 News
New Zealand Government Hekia Parata 2 SEPTEMBER, 2014 Maori Battalion’s legacy to be preserved The history of the legendary... more

Funding for Northland, Auckland, Waikato freshwater project

2 Sep 2014 News
New Zealand Government Amy Adams 2 SEPTEMBER, 2014 Govt funding for Northland, Auckland, Waikato freshwater project Environment ... more

Business

SFO charges MightyRiverPower engineer with $2 mln fraud

2 Sep 2014 Business News
Article - BusinessDesk   SFO charges MightyRiverPower engineer with $2 mln fraud By Paul McBeth Sept. 2 (BusinessDesk) - The ... more

NZ terms of trade sets new 40-year high in 2nd quarter

1 Sep 2014 Business News By Suze Metherell
Article - BusinessDesk   NZ terms of trade sets new 40-year high as cheaper imports offset falling exports Sept. 1... more

Living

Crowdfunding sought for Lee Tamahori to make second NZ film

2 Sep 2014 Lifestyle
The Patriarch PRESS RELEASE: Crowdfunding sought for Lee Tamahori to return home and make second New Zealand film 2 SEPTEMBER... more

‘Best trumpet player in the galaxy’ returns

1 Sep 2014 Lifestyle
NZ Symphony Orchestra 1 September 2014 - NZSO Media Release for immediate release The ‘best trumpet player in the ... more

Property

House sales down as winter cools market - REINZ

14 Aug 2014 Property
New Zealand house sales fell in July as winter cooled the appetite of house hunters while a drop in properties selling for $400,000... more

NZ property values rise at slowest annual pace in 13 months

7 Aug 2014 Property By Paul McBeth
Aug. 7 (BusinessDesk) - New Zealand property values rose at the slowest annual pace in 13 months in July as rising interest rates,... more

Migration

Who's living next door to you?

20 Aug 2014 Migration
Statistics NZ puts out detailed data on different ethnic groups, down to the 108 people from the Isle of Man. Did you know there are... more

NZ population growth speeds up

14 Aug 2014 Migration
New Zealand's climb to 4.5 million people has been faster in the past year than it has in any other year in the past decade,... more

Travel

Jetstar loses ground in NZ as Qantas plunges to A$2.84B loss

28 Aug 2014 Travel & Tourism By Paul McBeth
Aug. 28 (BusinessDesk) - Jetstar, the discount unit of Australian airline Qantas Airways, lost ground in New Zealand, while claiming... more

Auckland 10th most liveable city - again

19 Aug 2014 Travel & Tourism
Auckland has again been ranked the tenth most liveable city in the world. The Economist Intelligence Unit (EIU) has released its... more

Sport

Vaulting and Showjumping take Centre Stage at WEG

2 Sep 2014 Sport
Equestrian Sports New Zealand Vaulting and Showjumping take Centre Stage at WEG New Zealand representatives in vaulting and... more

Haier Pulse to Begin 2015 With Toughest Trip of All

2 Sep 2014 Netball
The Haier Pulse will once again face the reigning champions in the first round of the ANZ Championship, with a trip to Melbourne to... more

Columns

Martin Doyle cartoon: Wrong arm of the law

2 Sep 2014 Opinion
Opinion - Martin Doyle   Martin Doyle cartoon: Wrong arm of the law   more

Gordon Campbell on John Key’s ‘blame it on Judith’ strategy

1 Sep 2014 Opinion By Gordon Campbell
  Gordon Campbell on John Key’s ‘blame it on Judith’ strategy Right now, Prime Minister John Key seems intent... more

Kiwi Success

The duo behind NZ's hottest new label

20 Aug 2014 People
We're expecting big things from Harman Grubisa, the new label from Auckland-based friends Madeleine Harman (right) and Jessica... more

Victoria announces new strategic appointments

11 Aug 2014 Appointments
Victoria University of Wellington has announced the appointment of New Zealand’s first Provost, Professor Neil... more

Recruitment

High dollar, hands-off Govt sends workers to dole queue

22 Aug 2014 Recruitment
The loss of up to 100 jobs at Croxley stationery in Auckland is devastating news for their families and the local Avondale... more

On track to surplus, more jobs, higher incomes

19 Aug 2014 Recruitment
New Zealand is on track to Budget surplus this year, backed by good growth, more jobs and higher incomes under the ... more