New Zealand primary export earnings set to rally: report

Growing populations and rising incomes in China and Southeast Asia will reverse the decline in New Zealand primary sector exports over the next four years, said a government report Tuesday.

Forecast export revenues of primary industries for the year ending this month were down 8 percent year on year to 35.2 billion NZ dollars (25.12 billion U.S. dollars), with dairy revenues expected to be down 22 percent and forestry revenues down 10 percent, according to the report from the Ministry for Primary Industries (MPI).

"We then expect a return to growth with a 1.5-percent increase in export earnings for 2015-2016 to 35.7 billion NZ dollars (25.48 billion U.S. dollars)," MPI director of sector policy Jarred Mair said in a statement.

"Longer-term the outlook is for steady growth across all sectors. Total export revenues by June 2019 are expected to be 41. 3 billion NZ dollars (29.45 billion U.S. dollars) -- a 17-percent increase on this year," he said.

"This growth will be underpinned by income and population growth in China and Southeast Asia. Steady growth in other key markets will further bolster growth," said Mair.

"China remains our most important market for primary industry exports. Demand drove dairy prices high heading into 2014, and its construction boom helped lift forestry export earnings. However, excessive inventories and slowing construction have reversed these price gains for the 2015 year."

Volatility in dairy markets had been further exacerbated by abundant milk supply from other exporting countries and from geopolitical factors such as the Russian trade sanctions.

The last 12 months had been a tough year, with volatility in overseas markets for some key export commodities, and challenges to production from climatic events such as drought, storms and floods."

"There's no denying that it's hard going right now for some of New Zealand's primary industries but we are forecasting better times to come," said Mair. Endi