Primary industry revenue to fall in 2017, MPI says
China could develop into a reliable secondary market for New Zealand's beef exports.
The Ministry for Primary Industries has warned revenue from the sector is likely to fall by 0.8% next year to $36.7 billion, mainly due to a slump in two sectors: meat and wool as well as arable.
In its latest Situation and Outlook for Primary Industries (SOPI) report, the department says it expects meat and wool export revenue to fall 11% to $8.2 billion due to falling global food prices and declining production. The report notes that "meat and wool exports to China have dropped 14% in the year to September, to $1.8 billion, a decline most keenly felt in mutton and wool products."
However, beef exports to China have increased, with rising volumes offsetting slightly lower prices. The document suggests China could develop into a reliable secondary market for New Zealand's beef exports, after the US.
Dairy export revenue is expected to rise 3% to $13.69 billion, although this will be offset by a fall in production of 1.7% because of a persistently wet spring. A record cull of cows in the year to June 2016 is expected to reduce numbers by 1.7% .
According to the report, arable export revenue will drop 12% to total exports of $180 million because of a stronger New Zealand dollar and weaker demand for herbage seeds. Demand from the domestic dairy sector is also expected to be subdued as dairy farmers continue to limit costs as they recover from the recent bust in prices.
Honey export volumes have also noticeably declined, with stocks increasing in New Zealand. Sales to Australia, Hong Kong and China have also slowed noticeably.
The report also notes the strong rise in products being shipped to market by air.
Air freight exports have increased three times faster than sea freight since 2011 and now make up 5% of total primary industry export revenue. Crayfish is the most valuable product shipped by air freight. It's worth $317 million and attracted prices of more than $100 a kilo this year, of which 99% goes to China.
(BusinessDesk)
Edwin Mitson
Wed, 14 Dec 2016
Wed, 14 Dec 2016
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Primary industry revenue to fall in 2017, MPI says
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