A Pause in Steady Growth
New Zealand’s primary sector, after witnessing a remarkable growth trajectory over the past six years, is now confronting a downturn. The Ministry for Primary Industries, in its recent Situation and Outlook for Primary Industries report, has projected a 5% decrease in export earnings for the current year.
This decline, attributed to global economic headwinds, marks a temporary deviation from the sector’s cumulative $11 billion export growth since 2019.
Export Earnings: A Retrospective and Forward-Look
The sector’s export revenue, which escalated from $46.3 billion in 2019 to an impressive $57.4 billion in 2023, is now expected to dip to $54.3 billion in the 2023-24 financial year. This anticipated reduction is primarily due to price corrections and a slump in global consumer demand. However, a rebound in growth is expected in 2025.
Government’s Perspective and Strategies
Agriculture Minister Todd McClay has acknowledged the sector’s resilience amid various challenges, including domestic inflation, interest rate hikes, labour shortages, and geopolitical tensions. Emphasising the sector’s significant contribution despite these hurdles, McClay has reiterated the government’s commitment to enhancing the value of primary sector exports through strategic trade agreements over the next decade.
Sector-Specific Insights
The report sheds light on individual sector performances and future expectations. While dairy, horticulture, seafood, arable, and processed food sectors have bolstered returns, meat, wool, and forestry have experienced diminishing returns.
Notably, dairy exports are predicted to see a 7% decline, with meat and wool, forestry, and horticulture also expected to face reductions in the coming year. In contrast, growth is anticipated in sectors like arable and seafood, driven by niche market strategies and robust demand.
Market Dynamics and Export Destinations
China continues to be a pivotal market for New Zealand’s dairy, meat, wool, forestry, and seafood exports. The United States and the European Union also emerge as key destinations for horticulture and arable products, respectively.
In terms of export revenue distribution, dairy leads with 45%, followed by meat and wool at 21%, horticulture at 12%, and forestry at 11%.
