MPI reviews the outlook for primary industries and finds them on track to double the value of sector exports by 2025

Content sourced from the Ministry for Primary Industries (MPI)

It has been a season of two halves for many primary sector producers.

The first six months of the year were great for pasture growth, but a severe drought gripped much of the country from late January until April. This will have serious ongoing financial implications for many pastoral farmers.

The drought, coupled with a stronger New Zealand dollar, has contributed to a dip in primary sector export earnings for the year to June 2013.

Longer-term prospects remain promising, however, due to ongoing demand growth for food and fibre in emerging markets and a gradual improvement in global economic conditions.

Looking ahead, dairy exports are forecast to increase by nearly $5 billion to $17.7 billion by 2017. Forestry and wine exports are also expected to increase significantly over the next four years.


New Zealand milk solids production in 2012/13 will experience its first year-on-year decline for six years, as a result of the drought. As at 1 July 2012, there were 5.01 million dairy cows and heifers in New Zealand, a 4 percent increase on the previous year.

A mild winter and excellent spring conditions contributed to good production at the start of the 2012/13 season. But, low rainfall and a record-high soil moisture deficit in many areas from January to March saw production fall sharply.

As a result, production is expected to decline 1.2 percent to 1 665 000 tonnes of milk solids in 2012/13. Dairy export revenue is expected to fall by 5 percent to $12.9 billion in 2012/13.

Further out, dairy export returns are forecast to increase due to strong demand from emerging markets and higher international prices.

Export receipts are forecast to increase by an annual average 8 percent over the outlook period, to reach $17.7 billion in 2016/17.


The year to June 2013 has been a tough one for the meat and wool sector.

It has had to deal with the most widespread drought since 1945/46, a strong New Zealand dollar, and prices for sheep meat, venison and wool retreating from the highs of the previous year.

Exports of meat, wool, hides and skins for the year ending June 2013 will decline 10 percent to $5.95 billion.

They are forecast to decline another 9 percent in 2013/14, because of ongoing drought effects.

Sheep and beef numbers are expected to decline gradually to 2017, due to better returns from dairying. E

xport receipts are forecast to increase, however, due to a gradual lift in lamb and beef prices on the back of economic recovery in NZ’s main export markets.

Future prospects will also benefit from growing demand for animal protein in Asia.

One of the most notable trends in this regard has been a rapid increase in lamb exports to China – in the five years to June 2012, China’s share of New Zealand’s lamb exports nearly tripled to 21 percent.


Forest product export earnings in the year to June 2013 are similar to previous years at $4.3 billion, as record log export volumes offset lower prices for most other forest products.

Forest export receipts are expected reach $5 billion in 2016/17, based on steady growth in international demand for logs.

Medium-term prospects for New Zealand timber, panels and pulp are more subdued.

In the longer-term, New Zealand is well positioned to increase export returns from the forestry and wood processing sectors.

In the 10 years to 2025, wood availability is forecast to increase by nearly 50 percent, to 35 million cubic metres per year.

Most of this increase will come from small growers who established forests in the early 1990s, but the harvest will depend on market conditions.

There are opportunities to increase the value of exports through more processing of wood. The Wood Council of New Zealand has recognised this opportunity and developed a strategic plan with a vision of more than doubling forest and wood processing exports to $12 billion by 2022.


Together, the largest export-focused horticulture sectors, kiwifruit, wine, pipfruit and vegetables, will earn around $3.2 billion in export earnings in the year to June 2013.

This represents a small decline on the previous year, due to the impact of the bacterial disease Psa on the gold kiwifruit harvest.

This is expected to decline further in 2013/14, as the industry replaces the traditional Hort16A gold kiwifruit cultivar with more Psa-tolerant ones.

Over the rest of the outlook period, horticultural exports are expected to increase by an average of 4.7 percent per year, to reach $3.6 billion in 2016/17.

This is largely due to an expected rebound in the kiwifruit sector from 2013/14, and ongoing growth of the wine industry. Forecast production scenarios are included in the graph below. The kiwifruit industry’s ability to establish the new cultivars will be pivotal to these.


Seafood exports are expected to total $1.5 billion in the year to June 2013. Wild-capture fisheries account for 83 percent of these earnings.

The aquaculture sector – the marine farming of shellfish and fish – accounts for the remaining 17 percent.

The medium-term outlook for seafood is reasonably subdued, with export earnings forecast to increase to $1.8 billion in the year to June 2017.

This is based on a modest increase in export prices for both the wild capture and aquaculture sectors.

Export volumes are expected to remain relatively static over the outlook period, reflecting sustainable harvesting of wild fisheries and the long lead times required to consent and develop new marine farms.


The full Report can be downloaded here »

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.


The Editorial in this weeks (june 11 2013) Straight Furrow
"Straight Furrow has received some truly alarming information about contaminants in palm kernel expeller and, once the Ministry for Primary Industries has responded, it will be published" Editor Jeff Smith
Straight Furrow has been delving into the murky world of PKE imports for a good while now, MPI has been as busy denying anything is wrong with the trade. Reports of monkeys and birds being found in the stuff when it arrives on farm. Reports suggesting soil is being imported along with the expeller. When MPI denied this, it was pointed out, how would they know, the stuff looks like dirt anyway.
PKE is imported from countries with endemic foot and mouth. MPI has some serious questions to answer and the time is NOW

Ministry of Primary Industries. We dont need fluff pieces on how flash we are doing when we have had so many biosecurity failures. May I suggest more time  on  the job of looking out for us, less time counting their chickens.

Extrapolating the current trend is the fault of all forecasters whether they are for weather, house prices or the stock market. Does no one think that China does not have the ability to wean itself off depending on our rural industry by deveoping its own? Joint ventures, Fonterra factories in China and Chinese attempts to purchase NZ farms have one target - transfer of the knowledge to Chinese interests.

Yes Smalltown and Henry Van Der Fonterra was so specific on his warning, one wonders exactly what his experiences were. I would bet Sanlu was not at the forefront of his mind. I got the gist doing business with the chinese was only possible with the farms going ahead. They have taken the best of the genetics on offer. The best of farming techniques on offer. I have heard though the cows only do about 3 years lactation at best, unlike 5 to 8 in NZ. Due to the large quantity of milk they produce, getting in calf again isnt easy, and the volume of milk in the udder roots it. So they will have their problems. However they have the technology now and their country is very very large. If they can find the water and feed, they will rapidly expand the business. In the meantime we rely on their continued support more each day. And when the rug is pulled as it was in May, using MPIs cock up (as an excuse?)... we are going to find ourselves on the rack.

Where is a lot of the extra Milksolids coming from? Increased supplements, that are expensive, so the overall gain is ok for Fonterra, who want as much milk as possible, but not profitable for farmer, unless payout at $8.
Farmers get locked in to complex systems of aiming for 450kg MS and above and become blind to their cost. Most profitable and efficent system seems to be 400kg MS fed mainly on grass and crop. Keep it  simple unless you like unneccessary stress...I know some farmers do!!