Big rise in dairy export earnings

Higher world prices and increased sales volumes have helped fuel a hefty $400 million or 8.5 per cent rise in the value of dairy exports in the year to April.

The strong export performance is further evidence of a bumper dairy season. Last week Fonterra chairman Henry van der Heyden revealed production for the year ended May 31 would set a new record of about 1.215 billion kg of milk solids. A strong late-season run had helped push output to a new high.

Earlier figures showed a rise in offshore dairy sales in April helped underpin a surprise monthly trade surplus.

They made up 19.6 per cent of all exports in April - compared with an average of 15.1 per cent for April months over the past decade.

Sales were up 54.5 per cent or $209 million on April 2005 to $592 million, the highest ever for the month of April.

An annualised breakdown shows that in the year to April 2006, dairy exports were worth $5.46 billion, up on the $5.04 billion achieved in the year to April 2005.

ANZ Bank chief economist Cameron Bagrie said extra sales volumes would not have accounted for all of the annualised rise in the value of dairy exports in the April year.

He said dairy prices were also more than 3 per cent higher.

"Two-thirds [of the annual growth in the value of exports] is volume, one-third of it is price," Bagrie estimated.

More than $350 million worth of the April 2006 year increase came in sales of milk, powder and yoghurt, which were up just under 12 per cent at $3.39 billion in the year to April 2006.

That compared with a 4 per cent rise in butter exports to $959 million and a 2.8 per cent rise for cheese exports to $1.1 billion.

The $5.4 billion figure for dairy alone in the April 2006 year compares with about $5.2 billion worth of exports for dairy and a number of other goods - such as eggs and honey - registered in calendar 2005.

Hayley Moynihan, a senior analyst with rural lender Rabobank, said it was positive to see the April-year rise.

But it could be difficult to pick exactly what the underlying trends in dairy exports were from Statistics New Zealand figures.

The numbers could be influenced by the timing or the source of an export order, or whether there was more of a higher-value product going out within a period being measured.

The biggest increases included exports to the US, Venezuela, Vietnam, the United Arab Emirates, Mexico, Algeria, Syria and China.

Dairy dollars

* Value of dairy exports rose more than $400 million in the year to April 2006.

* The 8.5 per cent rise to $5.46 billion is attributed to stronger volumes and higher prices.

* Some of the biggest sales gains were to American, Middle-Eastern and Asian countries.