Rebounding dairy prices and Chinese demand for wood are expected to help boost export earnings for New Zealand's pillar primary sector by an average 5.4 percent a year over the next five years, said a forecast report from the Ministry for Primary Industries (MPI) Tuesday.
The outlook across the primary sector was stable for the current year, as dairy prices rose and growth continued for the horticulture and forestry sectors, but this was offset by a forecast decline in meat and wool exports, said the MPI report.
Total primary sector export revenue was forecast to be 36.7 billion NZ dollars (26.39 billion U.S. dollars) for the year to June 2017, down 300 million NZ dollars (215.79 million U.S. dollars) from the previous year.
But by the year ended June 2021, primary sector export earnings were forecast to total 47.9 billion NZ dollars (34.45 billion U.S. dollars).
"This highlights again the strength of our primary industries, and the benefits of our diversified primary sector. However, lower economic growth in trade partners creates headwinds for New Zealand primary industry export growth," MPI director of sector policy Jarred Mair said in a statement.
Dairy export revenue was forecast to rise 3 percent in 2017, and was expected to increase 24 percent to 17 billion NZ dollars (12.23 billion U.S. dollars) in 2018 as milk production was forecast to return to previous levels after two years of decline.
"The average payout for dairy farmers is now expected to be above break-even for most, and there is also continued strong growth for sectors like horticulture, forestry and arable," said Mair.
Meat and wool export revenue was forecast to fall 10.8 percent in 2017 as beef production volume fell back from peak levels and prices declined as U.S. and Australian production recovered.
Demand from China and an increase in wood available for harvest were expected to help forestry exports reach 5.3 billion NZ dollars (3.81 billion U.S. dollars) in 2017, and exceed 6 billion NZ dollars (4.31 billion U.S. dollars) by 2020.