Friday, March 29, 2024

Primary exports growth to ease

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Agricultural exports have risen $7.5 billion in the last two years but returns are expected to soften his year before growing again, The Primary Industries Ministry Situation and Outlook report says.
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Export returns for primary produce in the year to June 30 are expected to be $45.7 billion.

The report predicts a slight fall in the coming year before returns start climbing again, to reach $48.5 billion in 2023.

Despite economic and political uncertainty affecting world markets New Zealand’s returns have remained solid and though there is continuing risk it is offset to some extent by the weak dollar.

“This export performance by NZ’s primary sector producers is all the more impressive considering the weakening global economic environment and the high degree of uncertainty creating tensions across international markets,” the report issued by director-general Ray Smith said.

However, given the uncertain international backdrop and despite strong export performance the downside risks to the forecast are heightened over the next few years.

Production and returns are expected to fall slightly in the next year before resuming moderate momentum in the medium term in meat, dairy and horticulture.

Sustained Chinese and southeast Asian demand is supporting strong prices and the weak dollar is expected to continue supporting export returns.

“Strength in prices supported by an increasing proportion of higher-value products is expected to sustain growth in dairy export revenue despite constraints on milk production growth,” Smith said.

“NZ’s current run of export success over the past two years has occurred despite a rising sense of uncertainty in global markets.

“This is in part because the products we trade in haven’t been directly affected so ar and in part because the NZ dollar has fallen over the past two years.

“However, these issues do provide an increasingly uncertain backdrop to the otherwise positive outlook.”

The clouds include slowing global economic growth expectations, rising protectionist sentiment and uncertainty caused by Brexit, United States-China trade tensions and outbreaks of African swine fever.

But the bigger concern for NZ is their potential impact on consumer demand in Britain, America and China.

On the plus side the Comprehensive and Progressive Trans Pacific Partnership has the potential to deliver $222 million of tariff savings and open new export destinations.

But primary produce exporters must ensure they have contingency plans for Brexit because of the wide range of outcomes possible, including a no-deal, Smith said.

He also promised more openness.

“There is still potential for MPI to be more open, more visible regionally and easier to access.

“As director-general I want to make sure MPI is in the best position to direct our focus appropriately, deploy resources where needed and build the trust and confidence of New Zealanders in the work we do,” he said.

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