Rabobank’s report on the agricultural sector outlook for 2026, entitled Keeping One Move Ahead, likens the challenge to a game of chess in which many different influences will shift suddenly and unpredictably.
It will be essential to be ready to adapt strategies at short notice to avoid being blindsided. To do this will require thinking three moves ahead instead of reacting to each surprise development as it occurs.
The report’s author Emma Higgins suggests the global chessboard shifted in 2025 through a series of changes related to trade blocs, industrial policies, and geopolitical manoeuvring. As we enter 2026 the pace of change hasn’t slowed.
The report argues for New Zealand agribusiness to maintain last year’s strong performance, the various sectors must keep abreast of the wider factors at play, rather than short term developments such as weekly pricing volatility or movements in the store market.
Higgins suggests the most important influence will be the political situation both locally and internationally which will in turn affect currency movements and the cost of capital or interest rates. Domestically the current government has stated there will be no lolly scramble despite this being an election year, while interest rates appear to have reached their lowest level in this cycle.
It is doubtful the public will be impressed by the austerity these two factors imply, unless the economy improves markedly and quickly, so people feel better off. The high cost of living means things won’t improve sufficiently, so there is a strong possibility of the National-led coalition losing the election. If this happens the agricultural sector will almost certainly be exposed to a less friendly political environment.
The recent strengthening of the NZ dollar against the currencies of all our main trading partners apart from Australia, while reducing export margins, may benefit the overall economic performance, if not export prices.
The role of the American dollar as the main international reserve currency may weaken because of the changing nature of the USA’s sphere of influence with its focus on dominating its western hemisphere. This automatically increases China’s influence in the Asia Pacific region.
The New Zealand government, as well as key export sectors, will be aware of needing to tread a very fine line between traditional partners and allies on one hand and newer partners with which we may have a more conflicted relationship. This situation is made especially challenging because we may not always like the way our traditional partners behave.
We remain totally dependent on our continued ability to trade with as wide a range of partners as possible, given the United States’ flagrant disregard of the World Trade Organisation, while Winston Peters’ refusal to support the FTA with India highlights the risks of a coalition government.
New Zealand is extremely fortunate in the skills of its trade negotiators who do all the hard grind required to work through the minute details of trade agreements. The glory goes to the politicians, but the real credit lies with the officials that do the hard work. It must be galling when that work is put at risk by political posturing.
Rabobank highlights the increasingly volatile weather patterns, energy supply and the cost of fertiliser and feed as potential rogue elements which could strike at any time.
The outlook for commodities remains favourable for the year ahead with a combination of firm demand and tight volumes in most areas, although the milk price may face some downward pressure because of the strong global supply trend. Wine exports to the USA, our largest export market, will struggle to overcome the effect of tariffs.
It is hard to argue against Rabobank’s assessment of the complex environment facing the agricultural sector and the need to remain alert and ready to adapt to change. Threats fall into two categories: those inflicted on us – either climate effects or geopolitical – and those that are self-inflicted, such as domestic political decisions and failure to meet customers’ needs.
Whatever the reason, farmers must concentrate on the essentials of feed budgets, on-farm efficiency improvements, and cost management to guard against nasty surprises. Representative bodies like Federated Farmers, B+LNZ and others must deliver even better value for money to farmers.
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