SONZAF 2005 Released
In December 2005 the Ministry of Agriculture and Forestry (MAF) released its annual Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report. SONZAF says that after mixed fortunes during the previous 12 months, NZ's primary sectors should brace themselves for a tougher year ahead. Prospects, however, are looking less bleak for 2007, with improvement expected in revenue and profitability across all sectors as production and demand in key export markets improve.
The last year has been good for dairy and meat farmers and wine growers, who have benefited from stronger international prices and premium product positioning in key export markets. Other sectors, especially foresters, apple growers and deer farmers, have struggled with declining international prices, higher costs, a stronger NZ dollar and other difficult market conditions.
The supply and demand conditions that favoured much of the pastoral sector are expected to decline over the next year. Future profitability, the report says, will also be affected by higher costs and greater exposure to the high NZ dollar. The report forecasts an upturn in 2007 as production and demand in key exports improve, the NZ dollar weakens and international oil prices ease, reducing on-farm and transport costs.
Highlights in Brief:
- Agricultural sector income is expected to fall to $3.7 billion in the March 2006 year from $3.8 billion in 2005. In 2009, agricultural sector income is expected to reach $4.5 billion.
- Farm gate returns are expected to be around $4.00 per kilogram of milk solids in the June 2006 year, down from $4.55 this year.
- Dairy revenue will continue to expand in the March 2006 year, largely reflecting a rise in milk solids production from 1.21 million litres in the previous season to 1.25 in the current season.
- Lamb numbers are expected to reach 33.5 million head again this season, while lamb slaughtering should rise to around 25.4 million and 25.6 million head in the 2005 and 2006 seasons.
- The outlook for horticultural crops, with the exception of wine and to a lesser extent, kiwifruit, remains subdued.
- Forestry harvesting is set to rise from a current 19 million cubic metres to potentially 26 million cubic metres over the next four years. However, there is a lack of co-ordination within parts of the industry, and this, along with international markets and limited wood manufacturing capacity, may hinder the ability of the industry to add value to this growing volume of wood.
- Total agriculture, horticulture and forestry exports represent over 60 percent of NZ's total merchandise trade.
- Dairy, beef, lamb, venison, wool, forestry products, apples, kiwifruit and wine exports are expected to decline to $15.5 billion in the March 2006 year, from $15.8 billion in the previous 12 months.
- By March 2009, export receipts for the major commodity groups are expected to expand $2.8 billion to $18.7 billion. Forestry and dairy exports are expected to lift by $1.0 billion and $900 million respectively over the period, while horticulture (largely wine exports) and meat are expected to rise in value by $550 million and $400 million.
- The average economic growth rate of NZ's trading partners is expected to pick up slightly from current rates to around 3.5 percent by the middle of next year.
The full SONZAF report is available on the MAF website: www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/sonzaf/2005/sonzaf-2005.pdf |
Contact for Enquiries
The Ministry of Agriculture and Forestry
Pastoral House
25 The Terrace
PO Box 2526, Wellington
Tel: +64 4 894 0100
Fax: +64 4 894 0720
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