Strong wool eyes China
China looks set to play a key role in helping the New Zealand wool sector shift away from trading as a commodity supplier.
Smith told Dairy News that the sector is on the road to recovery, but warns that it could be another 18 months before it gets back to a position which looks like normal.
The big imponderable in the recovery is what happens in China. There are reports its milk production is increasing, albeit at a lower rate now than a year ago, and that there has been a decline in NZ exports there, which is expected to continue in the coming year.
He also points out there will continue to be more competition in the markets.
"But remember, its middle class is still rising and so I think what we will see in countries like China where this is happening, is an increasing demand for protein. So, NZ has got a place in there and our dairy industry has got a range of products that it supplies into the market.
"And don't forget, the NZ dairy sector has access to around 160 markets and it's quite good at moving the product around to get the best value they can," he says.
At present, NZ is enjoying a mild winter which has helped regions like the Manawatū get back on their feet after an awful late summer and autumn. Again, an imponderable for the dairy industry is a prediction from NIWA that we may get another El Nino system later this year.
But Smith says the positive side is that this spell of good weather was never predicted, so one can only hope.
