Many of the strategic decisions farmers (like other business owners) must make are based on an outlook that extends far beyond the next season. Accordingly it can be useful to stop, take a step back and review the bigger picture. For example, where might interest rates and exchange rates be headed over the next decade?
We should be clear at the outset, that attempting to answer such questions clearly comes with a few health warnings. Long-run forecasts are not precise predictions. In reality the economy will be thrown in one direction by surprises we simply can't see coming - we can't forecast droughts, disease outbreaks, or earthquakes just to name a few such surprises.
But that doesn't mean long run forecasts can't be useful. They are a way of outlining our assumptions for how the current cycle might play out and give some basis for planning, given what we do know today.
The good news for New Zealand farmers is that we remain firmly optimistic on the longer-term outlook for global food prices (though volatility will remain a feature and prices are set to come under downward pressure in the near future as supply increases).
The rapid growth of Asian demand, changing appetites and consumption patterns as well as increasing incomes of consumers in this part of the world, all point in favour of New Zealand's competitive strength as a food exporter. This view in turn means we expect the NZ dollar to remain relatively high against the USD. We expect it to average around 71 cents over the next decade compared to 73 cents over the previous one.