MPI’s Diana Reaich: Building global trade relationships
Relationships are key to opening new trading opportunities and dealing with some of the rules that countries impose that impede the free flow of trade.
That’s the word from the Ministry for Primary Industries in its half yearly situation and outlook report, which states that for the 2017 year exports will be $36.7 billion – a drop of just $0.3b.
MPI’s director of sector policy, Jarred Mair, says this drop is due to falls in lamb and beef production combined with weak global meat prices. While dairy prices will rise by just 3%, production will be down by 1.7%.
But the good news comes in 2018, when primary sector exports will be up by 12.5% to $41.2b and will continue to rise over the following three years, reaching $47.9b by 2012.
MPI says much of this rise will be due to the dairy industry coming back on track after years in the doldrums. By 2021, export earnings from dairy will be $20.6b, while meat and wool exports will largely remain static. Not unexpectedly, horticulture will continue to grow as a major force in the primary sector as kiwifruit, wine, apple and pears lift exports from the present $4.9b to $6.3b by 2020. Also of note is the prediction that kiwifruit exports will hit the magical $2 billion mark in 2020.
Mair says this highlights again the strength of our primary industries and the benefits of our diversified primary sector. But he warns that lower economic growth in trade partners may create headwinds for NZ primary industry export growth.
Mair adds that demand from China and an increase in wood available for harvest are expected to help forestry exports reach $5.3b in 2017 and exceed $6.0b by 2020.
The report states that NZ faces challenges in some markets. These include stagnating EU economies, lower-than-expected growth in the US and a mixed performance in emerging markets. Other issues of concern are Brexit and the likely cancellation of the TPP.
“It’s pleasing to see the global dairy market rebounding after a difficult few years. The average payout for dairy farmers is now expected to be above break-even for most, and there is continued strong growth for sectors like horticulture, forestry and arable,” Mair says.
