On track for record primary exports

Wool export revenue was expected to increase 19 per cent. Photo / Supplied

The primary sector is still on target for record export income this year, a Ministry of Agriculture and Forestry report shows.

The outlook for the agriculture, forestry and seafood sectors, while still strong, has weakened slightly since the release of the annual Situation and Outlook for New Zealand Agriculture and Forestry report in June.

That was a result of challenges in some overseas economies, causing a markdown of export revenue expectations for dairy, forestry, meat and wool of $930 million or 3.5 per cent for the year to June 2012.

MAF has released a half-year update which shows climatic conditions in spring were favourable for milk production and lambing and overall pastoral production for the 2011-12 season was expected to be above average.

International dairy prices were falling from their peaks around February, through increasing supply from dairy exporting countries and sluggish demand from importers such as China.

Based on recent GlobalDairyTrade results, prices were expected to stabilise next year, although the eurozone debt crisis posed risks.

Dairy export revenue was forecast to reach $13.6 billion in the year to June 30, 2012, a downgrade from the $14.6 billion forecast in the report but, if achieved, still the largest annual export value.

MAF expected milk solid production to increase by 5.1 per cent on last season assuming normal climatic conditions.

Meat and wool export revenue was expected to reach $7.43 billion in the year to June 30, 2012, higher than the $6.97 billion estimated in the report, because of higher expected prices for wool and pelts.

The lamb schedule price for the year ended September 30, 2011, was at the highest level in inflation-adjusted terms since 1977, because of lower global lamb export availability especially after the poor lamb crop in 2010.

Lamb export revenue was expected to increase 9 per cent to $2.65 billion in the year ending June 30, 2012, through higher export volumes.

This spring's lamb crop was estimated to be 7 per cent up on last year.

Wool export revenue was expected to increase 19 per cent to $848 million through higher prices.

Forestry export revenue was expected to be $4.26 billion, down from the $4.69 billion forecast in the report because of lower forecast prices.

Log export volumes have fallen from the peak levels reached early this year. That was after several years of phenomenal growth, especially to China.

Log inventory levels in Chinese ports were high and Chinese buyers were slowing down log purchasing in response to the Government's tightening monetary policy and measures that had recently been taken to slow spiralling real estate prices.

Log demand from Japan was expected to increase as the Japanese earthquake reconstruction started, while South Korea was also expected to increase demand to take advantage of off-peak log prices.

Kiwifruit production in 2012 will be adversely affected by the bacterial disease Psa.

Export volumes were expected to fall 21 per cent to 89 million trays and export returns were expected to fall 18 per cent to $862 million for the year ending March 31, 2013.

"The impact Psa has had over the past year, and will continue to have on rural businesses and communities has raised the question of the Government's role in assisting recovery and MAF is investigating options," MAF said.

Zespri and the Government are paying $25 million apiece in a plan to contain the spread of the vine canker.

- Otago Daily Times, BusinessDesk