Ray Smith: Dairy still has growth potential despite flat export outlook
Ministry for Primary Industries (MPI) Director General Ray Smith believes there is potential for an increase in dairy farming in New Zealand.
Unsurprisingly, dairy export revenue will be down this year, but the drop will be partly offset by better-than-expected growth in other primary sectors, according to revised forecasts from MPI.
MPI released today a mid-year update on forecasts from its Situation and Outlook for Primary Industries 2014 (SOPI 2014), which was released in June.
The update revises the forecast for total primary industry export earnings to $34.6 billion for July 2014 to July 2015, a drop of 9.5% from record earnings of $38.2 billion in the previous year.
The main reason for the fall is a $4.2 billion drop in dairy export revenue, due largely to reduced demand as a result of Russian trade sanctions and high inventory levels in China.
Off-setting the dairy fall, market conditions for beef are likely to be strong for the next two years, says Jarred Mair, director sector policy.
"A combination of strong US demand and drought conditions in Australia mean that we have seen record lean beef prices this year.
MPI forecasts that meat and wool export revenue will rise by $518 million this year.
Mair also expects to see increases in export revenue from seafood, horticulture, arable, live animals, other agricultural and food products.
"We're seeing improved demand for New Zealand's top earning seafoods such as rock lobster, mussels and salmon.
"Another positive is Psa disease has had less impact on the Gold3 kiwifruit cultivar than initially thought, which has pushed up export volumes," says Mair.
Forestry sector export revenues are expected to return to growth in 2015-14 as demand for logs increases.
