Trade balance with the US a saving grace
New Zealand is so far escaping the unpredictable vagaries of President Donald Trump's trade policies by the skin of its teeth.
Following several years of pain, farmers and growers are facing a decent upswing in commodity prices, say economists.
The good news isn't restricted to the pastoral sector - horticulture exports are also rising.
RaboResearch senior agricultural analyst Emma Higgins points out that following several years of challenging market dynamics - high input costs, interest rates, and lower farmgate prices - New Zealand agricultural producers look set to be dealt a "significantly improved hand" in 2025.
"The 2025 'deck' looks much improved for New Zealand agricultural producers, providing a relatively strong hand for the year ahead," says Higgins.
"While there are a couple of 'wild cards' and 'jokers' to navigate, all in all, we think the deck is stacked in the sector's favour and, if we play our cards right, a royal flush of opportunities lies ahead for the sector in 2025."
A contraction in beef numbers globally alongside strong demand from the US is likely to build upon an already strong pricing base for this year and beyond for New Zealand beef, notes Higgins.
"Dairy producers are also likely to see balanced market dynamics in 2025, supporting record nominal farmgate pricing forecast for the 24-25 season.
"Sheepmeat, the laggard of the bunch of late, has kicked off 2025 with lamb prices nearly $2/kg ahead of last year. Aussie sheep numbers are finally dropping and good demand from the UK, EU and US has underpinned recent returns. And, if Chinese demand for mutton picks up, we could be looking at a 'full house' for farmgate prices across our major agri export sectors."
While sheep farmers may not be celebrating yet, BNZ senior economist Doug Steel says the recent 41% gain in the price of a leg of lamb will be welcomed.
Steel notes that there has been a decent upswing in global prices for some of NZ’s major primary export products over the past year. For example, wholemilk powder prices are up 18%, the price of a leg of lamb is up 41%, and the US imported bull beef price is up 24%.
“Such gains will be welcomed by domestic producers and those directly connected to primary sector returns alike. To be sure, not all primary prices have performed as well and some of the price gains have been off previously very low levels (like lamb), but they still represent a significant improvement from year-ago levels.
“It offers material support to the prospect for export returns for the current season’s produce relative to the previous season.”
He says the positives have not been restricted to the major pastoral sectors. Horticulture export returns have also stepped higher.
“Latest figures show horticulture exports in 2024 were 31% higher than in 2023. This was driven by kiwifruit with a hefty gain of 44% while apple exports rose 14%.
“These gains were buoyed by the season’s bumper production volumes, which was a major change from the previous cyclone-affected season,” says Steel.
Dairy continues to be a star performer. Last week’s 4.1% in whole milk powder prices takes the flagship product’s price to US$4169/tonne – the highest price in nearly three years.
Westpac’s industry economist Paul Clark says dairy’s market price outlook remains favourable.
He says WMP has led the recovery, reflecting a greater buying presence from Chinese and European buyers and lower offer volumes.
“Increased Chinese purchases reflect efforts to rebuild previously run-down inventories, especially ahead of the Chinese New Year,” Clark says.
He notes that Westpac’s forecast milk price for the season – the same as Fonterra’s forecast milk price midpoint of $10/kgMS – could rise.
“Our milk price forecast assumes lower average dairy prices over the remainder of the 2024/25 season. That in turn assumes the rebuilding of dairy inventories in China winds down.
“However, should the rebuild continue at current pace, that is likely to sustain or push dairy prices even higher, implying an upward revision to our milk payout forecast.”
Farmer-owned co-operative Ravensdown is winding down the operations of its agritech subsidiary C-Dax following a long decline in sales.
The recent East Coast Farming Expo, held over two days at Wairoa, offered an insight into the current state of agriculture on the east of the North Island, at a time when the locals are remembering the second anniversary of Cyclone Gabrielle.
A Research programme supported by Beef+Lamb NZ is investigating the potential of ‘accelerometer’ sensors for early detection of conditions such as facial eczema (FE) in sheep.
In the past year, the Farmer Time for Schools programme which seeks to connect New Zealand school students with farmers, has experienced further growth.
Fresh Carriers Co. Ltd (FCC) and Zespri have completed the first ever kiwifruit charter powered by a low-emissions fuel.
New Zealand lingerie brand Rose & Thorne is expanding its virtual bra fitting service in an effort to provide rural women in with better access to specialised advice.
OPINION: At last, a serious effort to better connect farmers and scientists.
OPINION: If you believe Maori Party president John Tamihere’s claim that “nothing dodgy” occurred at Manurewa Marae during the last…