Economic overview

Since 2007, when the US-originated global financial crisis first materialised, New Zealand agricultural, forestry and fisheries exports have increased over 30% (or average growth of 7% p.a.). This is a stellar performance by any standard and especially given the challenging global context. In the year ending April 2011 the NZ dollar strengthened by a whopping 10% against the US dollar – but declined just over 3% against the Australian dollar. The New Zealand Treasury is anticipating the NZ dollar to remain at high levels against a trade-weighted basket of currencies until mid-2012 when it is expected to decline to historic long term averages – about the same time interest rates are expected to increase as the Christchurch re-build kicks-in.

Credit extended to the agriculture sector rose from $34.6 billion as at September 2007 to $47.56 billion as at August 2011. Over the same period, year on year growth in credit rose sharply to a peak in November 2008 at 22.5% before trending down and has been negative since March 2011. The focus on debt reduction in the various agri-sectors has seen an improvement in loan to value ratios and farm balance sheets – and a reduction in sector financial risk. This has been facilitated by greatly improved on-farm incomes together with interest rates at historically low levels.

Against a backdrop of difficult monetary conditions, commodity price volatility, global financial sector turmoil and widespread unemployment in developed countries, New Zealand agricultural, forestry (and fisheries) exports have performed strongly. For the period ending 31 March 2011 total agri-sector export receipts were up 16% on the 2010 year – comprising 71% of total merchandised exports. The biggest growth in export receipts has been dairy products (butter, cream, whole-milk powder, skim-milk, butter-milk, casein and related products) which have collectively increased 26% in the year to 31 March 2011. Coming in second and third, in terms of export growth, was forestry products (panels, logs and wood chips, pulp, paper, sawn timber and other related products) and wool products – which respectively grew 22% and 20% over the same period.

The overall bullish growth in agri-export values for the full year ending 31 March 2011 year has continued for the 12 months ending June 2011 (see table below).

Data: Statistics NZ & Ministry of Fisheries (figures rounded)