Meat and wool is one of the primary sector export revenues that the Ministry for Primary Industries (MPI) is expecting will support New Zealand’s primary sector export growth to 2017 and help offset the recent year’s fall in the dairy sector.
MPI’s newly released update of its Situation and Outlook for Primary Industries 2015 (SOPI) takes into account factors such as exchange rate movements, impacts of El Niño on drought and also the recent signing of the Trans-Pacific Partnership.
The meat and wool sector is expected to continue its strong growth, due to strong demand for beef exports from the United States.It notes New Zealand will meet its allowable beef export quota to the USA – 213,402 tonnes – this season for the first time since 2004. Chinese demand for wool also remains strong.
The government department’s new forecast for 2015/16 is for meat and wool to achieve export revenues of $9.9 billion for the June 2016 year, a revenue increase of $910 million – up 10 percent – on June 2015.
“This is largely due to a forecast depreciation of the New Zealand dollar, which is expected to boost exports,” the report notes.
Lower lamb production will be offset by an increase in beef exports in the 2016 year, SOPI predicts. Beef export volumes are expected to increase in the coming year driven by higher slaughter numbers in the September 2015 quarter. High beef earnings will primarily be driven by exchange rate factors rather than increasing global market prices as seen in the June 2015 year, while a fall in breeding ewe numbers, combined with poor breeding conditions, will result in a smaller lamb flock this season. Overall, MPI expects lamb export volumes to fall 3.1 percent compared to a year ago.
The forecasts suggest that export revenue for New Zealand beef and veal for the year ending June 2016 will reach $3.4 billion, lamb $2.6 billion, animal co-products $1.1 billion, hides and skins $574 million, mutton $433 million and venison $203 million (up 16 percent). Other meat, wool and carpets and other wool products make up the remainder of the predicted $9.9 billion for the sector.
Over the publication outlook period (2016 and 2017) the New Zealand to US dollar exchange rate is forecast to track lower than was projected in MPI’s June 2015 SOPI publication increasing New Zealand’s expected export revenue figures.
The signs across the primary sector are encouraging with New Zealand’s primary sector export revenue expected to increase to $37.6 billion in the year ending June 2016, up $1.9 billion from the year ended June 2015, according to MPI’s updated Situation and Outlook for Primary Industries (SOPI). The December update incorporates changes to export volumes and currency movements from MPI’s previous June 2015 SOPI publication.
The conclusion of key trade deals, such as the Trans-Pacific Partnership (TPP), will continue to support New Zealand’s primary sectors towards meeting the Government’s export and business growth targets with the export outlook for New Zealand continuing to be positive.