Boston, MA -- (ReleaseWire) -- 03/19/2014 -- We believe that increased access to international markets, particularly Taiwan and China, will prove to be the prime growth driver for the agribusiness sector in New Zealand over the medium-to-long term. This will be supportive for both the dairy and the livestock segments. However, we also warn that vulnerability to weather conditions, lack of skilled labour, tightening regulations and the consequent increase in operating costs could dent growth prospects.
- Milk production growth to 2017/18: 14% to 22.3mn tonnes. Given the small domestic consumption base and the high productivity of the sector, long-term expansion will mainly come from export opportunities, particularly to Asia and the Middle East, which are forecast to enjoy significant dairy consumption growth over our forecast period.
- Milk powder production growth to 2017/18: 18% to 1.5mn tonnes. Across all the dairy segments, export opportunities (particularly to China) will be the main growth drivers over the medium term.
- Beef production growth to 2017/18: 3.2% to 671,000 tonnes. The dairy sector will continue to limit the amount of cattle available for slaughter.
- BMI universe agribusiness market value: US$10.4bn in 2014 (up slightly from the expected 10.3bn in 2013; forecast to grow annually by 2.3% on average to 2017)
- 2014 real GDP growth: 2.7% (down from 3.5% expected in 2013; forecast to average 2.5% from 2014 until 2017).
- 2014 consumer price inflation: 2.1% (up from 1.1% in 2013; forecast to average 2.4% from 2014 until 2017).
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Milk production in New Zealand is on track to rebound strongly in 2013/14 after output tumbled in 2012/13 following the worst drought in decades. Record payouts to farmers and elevated production volumes will improve dairy farms' profitability, which was affected by the adverse weather. Despite the growth in revenues, some farms will remain vulnerable to a price or output decrease owing to the mounting debt burden within the sector. Weather conditions for the 2013/14 season have greatly improved since the 2013 drought. Pastures are recovering thanks to improved rains, and production is being buoyed by a succession of price increases offered by processors. The economic performance of New Zealand's dairy farms is likely to improve in 2013/14 following 2012/13's trough in revenue.
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