Strong year picked for ag in 2019

MPI releases its Situation and Outlook for Primary Industries (SOPI) report quarterly, looking at the performance of our main primary industries and forecasting how they will perform over the next two to five years. It also analyses the performance of primary industries in NZ and looks at emerging issues affecting trade and production.

The latest SOPI report (March 2019) says primary export revenue for the year ending June 2019 is forecast to reach $45.6 billion. This is 6.9% higher than the previous year (ending June 2018) and 3% higher than MPI’s December 2018 forecasts. 

It says the increase is being driven by a strong production season and another increase in dairy and meat prices.

“In 2019, we expect horticulture to be the fastest-growing sector. Improved growing conditions (compared to 2018) for the last harvest led to higher yields of kiwifruit and most other horticultural products,” the report says. 

“Dairy export revenue is forecast to increase 5.5% from last year to over $17b in the year to June 2019, building on gains in the previous two years.”

Agriculture Minister Damien O’Connor says primary industry export performance is up nearly $3b on the previous year. 

“This news will be welcomed by many, especially in light of the significant challenges the sector is facing, with dryness being experienced in many in rural areas — especially the drought-affected top of the South Island — fires in Tasman and the cattle disease Mycoplasma bovis.” 

O’Connor says this performance is even more impressive considering a more modest outlook for the global economic environment and high uncertainty generated by trade tensions. 

“Import demand from China continues to strengthen for most primary industry products, and exports to the US are still higher than historic levels,” he says. 

Sector outlooks

Dairy:

- Dairy exports to rise 5.5% to $17.6b

- 3.7% growth in milk production onfarm

- Higher value products like cheese and infant formula to drive growth in export revenue.

Meat and wool:

- Meat and wool export revenue to increase by 6.0% to $10.1b (after a large 14.2% gain in 2018)

- Strong demand helping to maintain high prices.

Forestry:

- Forestry exports to now increase by 7.0% to $6.8b due to stronger harvest volumes than previously

- Demand is expected to remain steady over the next year, with an expected increase in Chinese residential construction despite the weakening Chinese economy.

Horticulture:

- Horticulture exports now expected to rise only by 15.7% to $6.2b

- Kiwifruit export revenue to rise 33% due to increases in volumes and prices

- Wine and apple and pear export revenues are expected to increase by 3.9% and 11.5%, respectively.

 Arable:

- Exports for the year ending June 2019 to fall 3.2% to $235 million

- A positive long-term outlook for arable exports, with moderate price and volume growth.

Other primary sectors:

- Export revenue to increase to $2.8b, up 3.5% from 2018

- Innovative foods, ‘other’ products, sugar and confectionery products are growing faster than previously forecast.