However, this time the growth in value would come from a far broader range of primary products returning higher values, with almost all sectors upbeat on returns.
In the December MPI Situation and Outlook for Primary Industries report, MPI analysts attribute the predicted 8.5% increase in export earnings to a broad and robust demand for dairy and forestry, an improving red meat demand and continuing expansion in the horticultural sector.
In 2014 primary produce exports had an 18% jump in earnings but dairying contributed three-quarters of it.
This time the mammoth dairy sector still contributed the most to the forecast increase, despite $250 million of shine coming off MPI’s September forecast because global prices had softened.
The sector was still expected to be up $2.2 billion to $16.84b, providing 68% of the increase.
The 2014 figure of $17.8b earnings for the dairy sector was a reminder of just how huge the surge in milk powder prices was, driving dairy farm payouts to an industry record of $8.40/kg milksolids.
The optimism of the report stems from a continued upbeat prediction for weather, despite sweltering, dry conditions lately.
The report said NIWA expected normal soil moisture levels and meteorologists continued to predict a break in the dry spell as wetter northeasterly conditions prevailed later in summer.
The New Zealand dollar had weakened in the post-election environment, down from its two-year July high of US75.6c to US69c, significantly moderating the fall in dairy prices.
The Food and Agriculture Organisation’s food price index was at its highest point since 2014, bolstered by sustained high red meat prices and dairy continuing to hold its own.
Beef was expected to perform at the same level as a year ago and tight sheep meat supplies here and weaker production in Australia had helped underpin the $300 million increase in sheep meat returns.
That was paralleled by horticulture where strong demand for Gold kiwifruit was being matched by growth in pipfruit and wine production, to push the sector to $5.4b earnings.
Agriculture Minister Damian O’Connor said the growth in the primary export sector was encouraging and, being spread across all sectors, the gains were expected to be built on a sustainable foundation.
“Despite a decline in cow numbers there has been some better value for exporters.
“The forestry sector is on pace for a third consecutive year of strong export growth with exceptional demand from China,” he said.
The figures for dairy also showed encouraging signs the industry’s value-add approach was starting to work with infant formula expected to exceed $1b in earnings for the first time. UHT and yoghurt products were also forecast to touch $1b in earnings for the first time.
Forestry exports were expected to equal the horticultural sector with a value of nearly $5.7b in 2018.
After a dip following last season’s abysmal honey harvest the coming year was expected to have that sector also back on track earning $350m in exports.
The other primary exports sector with its range of processed products, honey, cereals and animal exports would earn almost $2.7b. Processed foods now accounted for a quarter, $770m, of that after being worth only $300m only four years ago.
