The best prices for sheepmeat since 1977, stabilising dairy prices and favourable spring weather all augur well for agricultural production, the Ministry of Agriculture and Forestry says in a six-monthly update to its annual Outlook publication.
Weaker than expected export prices for dairy, forestry, meat and wool have knocked forecast revenue for the year to March 2013 down by 3.5 percent, or $930 million, though MAF says commodity prices remain at “historically high levels”.
Meanwhile, climatic conditions over spring in New Zealand were favourable for milk production and lambing.
However, it warns the forestry industry can expect tougher competition in the Chinese market for unprocessed logs, as Russia is being forced to remove an export tax as part of its entry into the World Trade Organisation.
The star performer among agricultural products this year is lamb meat, which is fetching its highest inflation-adjusted price since 1977, although increased supply is expected to dampen prices over the next two seasons.
“The dairy sector faces a squeeze between increased supply from other major exporting countries and slowing demand from major importers such as China,” the MAF update says. “However, the sector’s expected total earnings, at $13.6 billion for the year to June 2012, will still be the highest to date.”
On the outlook for fisheries, MAF says the increased hoki quota and new legislation making aquaculture developments easier will underpin “modest” increases in output in the short to medium term.