Situation and Outlook for New Zealand agriculture and forestry published

Higher earnings from agriculture and forestry are expected to continue, Agriculture Minister Jim Sutton said today.

Mr Sutton said the Situation and Outlook for New Zealand Agriculture and Forestry report, published by the Ministry of Agriculture and Forestry today, indicated that the good prices and exchange rate experienced by farmers during the past season should last for another couple of years, at least.

However, he emphasised that the SONZAF report had been completed before the terrorist attacks in the United States on September 12. The economic impact of these, medium and long-term, is still uncertain.

"Analysis of risk areas in our trade, particularly with the United States, indicates that food items in general should be more immune to any reduction in imports compared to other discretionary items, unless a recession bites hard.

"Manufactured goods could be hit harder, though it is possible there will be growth in niche areas, less directly exposed to consumer sentiment."

The SONZAF report says the outlook for agriculture and forestry to 2005 is underpinned by generally improving world growth prospects. Appreciating exchange rates for the New Zealand dollar with respect to major trading partners are anticipated, reflecting the improvement to economic fundamentals over the past couple of years, although Mr Sutton emphasised the difficulty of predicting international events.

"Relatively stable, to rising, prices for key export products are expected. Together with rising beef and dairy cattle numbers, rising deer numbers, increasing wood harvest volumes, and continuing productivity growth, the outlook for agriculture and forestry looks promising."

Milksolids payouts are expected to remain at or in excess of 450c a kilogram, against a background of improving international prices and an appreciating NZ dollar over the medium term.

Manufacturing cow schedule prices from 2001 to 2005 are expected to remain significantly higher than prices received in the early to mid-1990s. Lamb prices around $60 a head are expected during 2001 to 2005, significantly higher than the five years earlier.

Wool auction prices for 2001 to 2005 at around 500 cents a kilogram are expected to be slightly better than the preceding five year period.

Kiwifruit and apple prices to growers, however, are expected to fall during 2001 to 2005.

Lumber prices are also expected to fall from 2002 to 2005, due to an appreciating New Zealand dollar counteracting steady to firming international prices.

Wood pulp and panel prices are expected to fall from 2002 to 2004, rising again in 2005.