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Mixed bag of predictions in NZ’s latest trade report

By RJ Whitehead , 13-Dec-2012

New Zealand’s Ministry for Primary Industry has revealed that the country’s food industry is feeling the pinch as a result of the adverse global economic situation, even though favourable climatic conditions have been a boon to production. 

In its half-year update to the annual Situation and Outlook for Primary Industries report, Chris Jones of the ministry cites favourable weather as having left the country’s breeding stock in good condition, which in turn has “led to the expansion of New Zealand’s dairy herd.”

However, Jones reports that the continuing economic slowdown, particularly in the country’s traditional markets of the European Union, has been causing weaker demand for some New Zealand products, such as lamb.

And the strengthening of the New Zealand dollar against most major trading currencies in recent months has had having a dampening effect on farm-gate returns for primary produce. 

Exports down

As a result, total primary sector export revenue for the year to June 2013 is forecast to be around NZ$27.5bn, down 5% on the previous year's income, which accounted for NZ$29.2bn,” the update predicted.

The ministry anticipates, however, that international dairy prices are in line to recover over the remainder of the 2012-13 dairy season and beyond.

Moreover, beef prices are expected to remain firm over the next two years, following a major drought in North America affecting production there.

Ominously, the bacterial vine-killing disease, Psa-V, has spread to nearly all kiwifruit growing regions, and the ministry predicts this will have an adverse impact on gold kiwifruit exports in the year to March 2014.

To offset dawdling returns from traditional markets, the minister for primary industries has been seeking to open up new trade partnerships, as FoodNavigator-Asia recently reported.

Road to India

David Carter had been on the road to seek to negotiate what he called a “high-quality and comprehensive free trade agreement between India and New Zealand that would increase two-way trade, increase investment and encourage further collaboration in the agricultural sector.”

His India trip also set out to promote Kiwi innovations in farming techniques that would help boost Indian productivity and efficiency in milk and fruit production.

On his return to New Zealand at the beginning of this month, Carter revealed he expected the two countries to sign a free-trade agreement some time in the coming year as a move to address the issue of high duties levied by the Asian country. 

We are at a stage of serious negotiations. We believe good relationships are not build in haste. It could take three months or 12 months. But we hope to conclude by next year,” he said of the negotiations, which had started over 18 months ago.

Tariff level at the moment for butter coming into India is 30%, 60% on milk, 150% on wine,” the minister added. “There cannot be tariff of up to 150%. So, I think we will be working passionately to address this issue in FTA.”

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