Meat and wool export revenue is forecast to drop back slightly by 1.3 percent in the year ending June 2019, according to the latest statistics from the Ministry for Primary Industries (MPI).
MPI’s latest Situation and Outlook for Primary Industries (SOPI) report has been released this week.
“After an impressive gain in meat and wool exports in 2018, exports are forecast to decrease by 1.3 percent to $9.4 billion in 2019,” says Emma Taylor, MPI director of agriculture, marine and plant policy. This is after an impressive 14.2 percent gain in 2018.
“Despite forecast increases in farm gate prices for lamb and mutton, increasing production volumes are forecast to lead to lower export revenue overall,” she says.
Lamb and venison prices rose to record levels in the 2018 year, and SOPI shows this looks set to continue. Export revenue for lamb is forecast to rise by just over one percent to $3.05 billion in the year to end June 2019 and venison is forecast to lift by two percent to $200 million.
Strong consumer demand is pushing lamb and mutton prices higher, despite higher production out of drought-stricken Australia and the UK. “It appears the market is anticipating a gap in production over the next year as production and exports in New Zealand and Australia, and the UK, are likely to reduce over this time,” the report notes.
However, beef and veal and will see a fall of 6.5 percent to $2.7 billion and export revenue for mutton will be down by 13 percent to $500 million, the figures show.
“Beef prices re showing signs of weakness in the US, the destination for 43 percent of New Zealand beef exports by value. Drought conditions in the US and Australia have resulted in elevated manufacturing beef production from cull cows which – unlike US prime beef production – competes directly with lean manufacturing beef New Zealand exports to the US,” the report says. Even if the market weakens, farmgate prices are expected to remain near record levels,” SOPI says.
Venison farmgate prices reached $9.81 per kg in the year ended June 2018, 14 percent higher than the previous record set in 2009. “Farmgate prices are expected to increase further in 2019 with constrained supplies and strong demand indications, which is also expected to flow into higher average export prices,” it says.
The SOPI report forecasts New Zealand’s primary sector revenue overall will reach $43.8 billion for the year to June 2019, an increase of 2.5 percent from 2018.
“The latest update gives an encouraging assessment of our major primary sectors which continue to grow –up $1.1 billion from the previous year,” says Taylor.
“It’s a promising outlook and builds on the strong growth seen in 2018, when export revenue increased 11.8 percent. In 2018, dairy prices recovered from the lows of 2015 and 2016, high red meat prices boosted meat and wool revenue and strong demand for logs in China led to record export prices and volume.
“Overall, the latest outlook for our primary industries gives plenty of positives as we work to sustainably reposition primary industries up the value chain and deepen sector partnerships,” she says.
The MPI has published a new section on its website – the Economic Intelligence Unit is designed to make MPI’s data and analysis, like SOPI reports, more accessible.