On current production trends exports would have grown from $36.7 billion this year to $44b by 2020 leaving just five years to hit the goal of $64b in annual primary sector export revenue.
The MPI situation and outlook for primary industries report released today said dairy, meat and wool were dragging the chain while horticulture, other primary sector exports and food had grown strongly since 2012.
“From 2012 to our estimate for 2016 the nominal export value grew an average of 3.3% per year.
“In order to reach our real export target by 2025, primary sector exports would now need to grow by an average of 9.5% per year from 2016 onwards.”
The report said gains for the pastoral sector would come from better and sustainable use of resources, improved technology transfer, investment in industry, improved market access and responsive value chains.
Horticulture’s exceptional performance was highlighted, with Primary Industries Minister Nathan Guy describing it as “a star performer” that was on track to reach $10b in exports by 2020.
Export returns from horticulture grew 20% in the last year from $4b to $5b on the back of higher production of kiwifruit and pip fruit and a favourable exchange rate.
Agricultural export revenue to June
(comparisons with 2015 in brackets)
Dairy $13.2 billion (-6%)
Meat and wool $9 billion (+1%)
Forestry $5 billion (+8%)
Horticulture $5 billion (+20%)
Other (honey, processed foods) $2 billion (+14%)
Seafood $1.8 billion (+15%)
Arable $200 million (+14%)
Primary industry exports were valued at $36.7 billion, a 3% increase.
The value of primary sector exports is forecast to grow 3% in the year to June 2017 and 10% in the year to June 2018.
Expanding aquaculture was attributed for most of the 15% growth in seafood receipts, innovative processed foods, honey and live animals for the 14% growth in exports from other primary sectors and an increased harvest and being more competitive in China helped the forestry sector grow 8%.
In comparison the performance of meat and wool was pedestrian with exports growing 1% while dairy contracted 6%.
For a second consecutive year beef and veal exports were higher than previous years but lamb and mutton exports fell because of lower prices and a 5.5% drop in lamb numbers following a poor lambing.
Wool and venison enjoyed a strong year on demand from China and increased demand for high-value chilled cuts.
MPI forecast a positive medium-term outlook but warned export prices for meat and wool would ease in the coming year although beef looked positive for the next two years despite competition from Brazil.
A further fall in sheep numbers would affect returns from meat and wool.
NZ milk production fell 1.6% in the last year while increased production from Europe put pressure on international prices.
MPI expected a recovery in prices from December because of a rebalance in supply and demand and expected export revenue to climb from $13.2b this year to $17.7b in 2020.
It forecast a massive 20% increase in export revenue, from $13.8b to $16.6b, between 2017 and 2018.
Prospects for forestry were expected to remain bright, driven by increased demand for logs and lumber from China and less competition from the United States and Canada along with an expected depreciating NZ dollar and lower chipping costs.
Timber for increased house building in China was expected to come from NZ and Russia while logs from Canada and the US would be used to supply an expected increase in house building in the US.
The NZ harvest was expected to hit 30 million cubic metres but capacity and transport constraints would limit production much beyond that.
Export returns were picked to hit $5b this year and $6b by 2018.
Increased investment in Gold kiwifruit, wine, apples and pears would ensure horticulture exports continued to grow, expected to hit $5.7b by June 2020, up $1.6b on June 2015.
Production of Gold kiwifruit alone was expected to drive up kiwifruit exports to 71 million trays and $1.9b in export receipts by 2020.
A large 2016 vintage from a 450,000-tonnes grape harvest would push wine exports to $1.7b by June next year.
Further vineyard expansion of up to 5000ha in Marlborough would drive export growth beyond 2020.
Export revenue from apples and pears had doubled since 2012 to $700 million this year while greater volumes of onions and squash drove a 6% increase in revenue from export vegetables.
Looking ahead MPI said the biggest challenge facing the sector was a shortage of skilled labour.
Demand for vegetable seed was high but feed grain prices were low because of weak demand from dairy farmers and an abundance of grain on international markets.
High stocks of ryegrass seed in Europe also depressed prices but demand for clover and brassica seed from Asia and Europe was strong.
The area of feed barley was expected to fall but the area of feed wheat to expand because of demand from poultry and pig farmers.
