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Dairy drives primary sector exports gain

NZN 15/06/2017 Jonathan Underhill

Growth in exports of dairy products, forestry and horticulture are projected to drive a 2.4 per cent increase in New Zealand's primary sector exports in the June 2017 year.

This is up from the 1.4 per cent growth seen three months ago, according to the latest edition of the Situation and Outlook for Primary Industries.

Dairy exports are forecast to rise 10.2 per cent to $14.6 billion in the 12 months ending June 30, the Ministry for Primary Industries' SOPI says.

That's followed by a projected 6.4 per cent gain in forestry exports to $5.5b and a 5.9 per cent gain in horticulture exports to $5.3b, which will drive total primary sector exports in the current year to $38.1b from $37.2b a year earlier.

Forecast growth in dairy exports was upgraded for 2017 and 2018, compared to the March SOPI, with next year's estimate lifted to $17.3b from the $16.8b forecast three months.

The report was released about the same time as gross domestic product data for the first quarter, which showed agriculture, forestry and fishing expanded 2.8 per cent, the fastest pace of any sector, driven by increased milk production.

The rebound in dairy "represents a recovery of global dairy prices as supply and demand rebalanced over the year," MPI said.

Growth in dairy is being driven by prices for whole milk powder (WMP), the biggest dairy export, with exports forecast to rise about 13 per cent this year to $5.2b.

Infant formula exports are expected to rise 12 per cent to $770m this year and reach $1b in 2018.

"China's demand for imported dairy products remains strong due to a combination of lower domestic production and rising consumption," MPI said.

Meat and wool exports are forecast to fall 9.8 per cent this year to $8.2b.

"Prices for lamb, beef and venison are finishing the year much higher than previously expected, which has helped to offset some of the lost volume."

Forestry exports are expected to be driven by increase harvesting and global prices.

Growth in horticultural exports would be led by apples and wine and a pickup in kiwifruit as the result of increased planting of new gold varieties, it said.

Seafood exports are projected to be little changed, edging up 0.1 per cent to $1.77b.

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