Citing the latest Situation and Outlook for Primary Industries (SOPI), it says the outlook for New Zealand primary industries is positive, with strong growth forecast across most sectors and dairy prices expected to gradually increase over the next two years.
MPI director of sector policy, Jarred Mair, said, “Overall there has been a 6% decline in the value of dairy exports in the past year, but an expected gradual price recovery should lead to increasing dairy export values looking out two to three years. Overall, our forecasts show 34% growth out to 2020.”
For some sectors a drop in the New Zealand dollar has softened the impact of lower US dollar prices. Meanwhile on-farm, production across the primary sector has been relatively stable as El Nino conditions did not result in widespread drought.
Looking to Asia
Mair added that the dairy industry has responded to the subdued outlook through consolidation of businesses to improve productivity and manage costs.
“Dairy prices have remained weak as global supply is still abundant. New Zealand production is down marginally but export volumes are up. Production is still high in the EU, which is keeping downward pressure on prices.”
Mair said the outlook for the primary sector is supported by industry’s significant investments in processing capacity across the country in a range of sectors.
Free trade agreements will also help grow exports, he added, while population growth and economic development throughout Asia will support increased demand for New Zealand products.