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New Zealand Agribusiness Report Q3 2009Published by: Business Monitor International Published: Jun. 29, 2009 - 43 Pages Table of Contents
AbstractIn BMI's New Zealand Agribusiness Report for Q3 2009, we introduce the new Grain Outlook. The valueof grain production in New Zealand is dwarfed by the country's vast dairy and livestock sectors. Output,however, has been growing in the past couple of years driven by good growing conditions and anexpansion of the area planted to grain crops in response to high prices. With the livestock sector nowstruggling, particularly sheep farming which has seen falling profitability over the last few years, we seeprospects for grain production to keep expanding as farmers replant pasture with grain crops.The rapid retraction of agricultural commodity prices since last year has hit farm income hard. In April,industry body DairyNZ estimated that the average net income for dairy farmers will fall to NZD17,000this year from NZD115,000 in 2008. This will come despite a rise in overall milk production, generatedby increased herd size and improved pasture conditions. The price paid for milk solids by Fonterra, thecountry's largest dairy co-operative, fell to NZD5.10 per kilogram (/kg) this year, down from a high ofNZD7.90/kg at the height of the dairy boom last year. The price was later revised up slightly toNZD5.20/kg. Though the new payout is still high by historical standards, the rapid retraction has left many farmersfacing a hefty debt burden with a much reduced income. In 2007 and 2008, as dairy and livestock priceswere rising, farmers worked hard to expand their output and farm land sales increased rapidly, pushing upthe price of agricultural land. With the price of inputs also very high last year, many farmers built up largedebts. Farm sales have now fallen sharply. In the three months to April 2009, the number of farms sold wasaround half the level seen in the same period of 2007 and a third of the level of 2008. Reflecting this, theprice of agricultural land is now falling back. While some farms that have taken on too much debt in thedrive to expand over the past years may struggle to survive in the new climate, we believe that most willmanage to hold on. Once the world economy gets back on track, we expect demand for New Zealand'smeat and dairy exports to see strong growth, particularly from the emerging markets of the Asia Pacificregion. To help New Zealand's dairy farmers prepare for the future, DairyNZ has prepared a strategy for theindustry over the next ten years. The Strategy for New Zealand Dairy Farming, launched by PrimeMinister John Key on May 5, outlines how the industry should aim to develop up to 2020. The mainthrust of the plan is to ensure that New Zealand dairy production is able to maintain its costcompetitiveness in the coming years and also to ensure that the sector is able to attract the managerialtalent needed to run large, modern farms. The strategy is a positive sign that New Zealand's farmers areaware of the challenges that are ahead and should help them take maximum advantage of the expectedgrowth in demand for dairy products. Get Full Details About This Report >> |
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