Rural outlook positive

The latest Situation Outlook for New Zealand Agriculture and Forestry report pointed to a period of prosperity for rural people, Rural Affairs Minister Jim Sutton said today.

The SONZAF report, published by the Ministry of Agriculture and Forestry today, says that the outlook for agriculture and forestry to 2004 is underpinned by generally improving world growth prospects, and continuing low exchange rates for the New Zealand dollar with respect to major trading partners.

Stable to rising prices for key export products are expected, and together with rising beef numbers, rising dairy numbers, expanding wood volumes, and continuing productivity growth, the outlook for agriculture and forestry is promising.

The value of meat exports are projected to increase from $3.19 billion this year to $3.52 billion by 2004. During the same time, wool exports are projected to increase from $0.76 billion this year to $0.85 billion in 2004, while dairy exports are projected to rise from $4.53 billion this year to $6.08 billion in 2004. Other pastoral products (such as hides and skins) are projected to rise from $0.90 billion this year to $1.09 billion in 2004.

The value of kiwifruit exports is projected to rise from $467 million this year to $528 million in 2004, while apple exports value is projected to fall from $480 million this year to $426 million in 2004. Other horticultural products' value are projected to rise from $806 million this year to $963 million in 2004.

The value of forestry exports is projected to increase from $2.93 billion this year to $4.22 billion in 2004.

New data in the SONZAF report estimates the costs to the economy of the Asian financial crisis, the Russian financial crisis, and two years of drought at about 2.8 per cent of gross domestic product.

Mr Sutton said the SONZAF report highlighted the importance of agriculture and forestry to the New Zealand economy.

"The impacts of the Asian and Russian financial crises and two years of drought had a big impact on New Zealand's earning capacity. More than 60 per cent of our exports are from primary production.

"While it's no longer true to say New Zealand earns its living on the sheep's back, our farmers and the products of their labour are still critical to the health of our country."

The impacts of the Asian and Russian financial crises also show how vulnerable to external factors the New Zealand economy is. Climatic changes can also cause huge problems for exports.

Mr Sutton said the SONZAF 2000 report's forecasts were based exchange rate outlook as at 11 August 2000 of US48 for year ending March 2001 and a slow appreciation from then on. Currently, it is about US40 cents.

"This means that the lower exchange rate is likely to mean higher earnings thatn predicted for exporters in the short term, at least."

The SONZAF report is available on the internet at www.maf.govt.nz, or from MAF on request.