Not so good news for the new Government


In some not-so-good news for the new Government, the Ministry for Primary Industries’ “Agriculture Situation and Outlook” is forecasting a slow down in agriculture export returns in the 2018/19 year.

And the report barely acknowledges that the new Government has a much different attitude to environmental sustainability than its predecessor.

In the case of the booming aquaculture industry that may prove to be significant.

Two sectors will buck the slowdown trend --- horticulture and seafood but the “big ones” dairy and meat and wool will take a hit as their growth slows, in the case of dairy, almost to a stand still.







Meat and Wool













The report says that dairy export revenue is forecast to hold steady in the year ending June 2019 to just under $16.9 billion.

“While we expect milk solid production to recover next year, this is likely to be offset by lower dairy prices compared to the June 2018 year, particularly for Whole Milk Powder and butter,” it says.

The report notes that rising production in the EU and the United States is placing downward pressure on world prices.

There is no explanation for why meat prices are expected to stall after next year, but there is a gloomy forecast for wool.

“The wool market remains subdued, with little international demand to boost traded volumes or prices.

“Low Chinese demand, in particular, has limited New Zealand wool exports.

“In contrast, fine wool export prices (currently 8 percent of New Zealand’s wool export volume) have risen nearly 20 percent over the past year and are approaching record levels.”

In forestry, the report notes that log exports to China are currently booming but warns that despite this, there are some risks that the pace of log exports may slow in the short- to medium-term due to:

  • the Chinese Government starting to take action against a number of processing mills that are not complying with new environmental protection standards, potentially constraining processing capacity in the short run while driving industry consolidation in the long run;
  • recent changes in China’s financial regulation policies that have restricted access to capital for many industries, potentially curtailing construction activity growth.

But for seafood, the outlook remains positive.

The report says export prices are forecast to grow because of limited global supply.

Key seafood export markets continue to be China (31 percent of the total export value), Australia (14 percent), Europe (14 percent), the US (13 percent) and Japan (7 percent). Currently, these markets make up nearly 80 percent of the total seafood export value for New Zealand. 

However, the report suggests that growth will be limited from sea fisheries. 

Currently, wild capture fisheries contribute 86 percent to total seafood export volumes and 77 percent to total seafood export values.

“Catch volumes from wild capture fisheries show some annual fluctuations due to biological and environmental factors, but there is limited scope for continued volume growth from wild capture fisheries due to sustainability constraints,” it says.

“Therefore, export volume growth from wild capture fisheries is expected to remain steady (at under 1 percent per year) during the outlook period.

“Aquaculture is expected to be the main driver of seafood export volume growth due to salmon farm expansion in the Marlborough Sounds and increased mussel production supported by hatchery-bred mussel spat.

“Aquaculture export volumes are forecast to grow by 5.7 percent per year during the outlook period.”

But just as dairy expansion faces environmental challenges so too does aquaculture.

Proposals to shift six salmon farms in the Marlborough Sounds have pitted the Ministry of Primary industries (who back the proposal)  against environmentalists.

Earlier this year, Eugenie Sage, who is now Conservation Minister, was critical of the proposal.

“Three out of six new sites identified by the Minister and the Ministry of Primary Industries are in locations that the Marlborough Council and community have said should be off-limits for marine farms because they’re in uniquely beautiful spots, important habitats and recreational areas,” she said.

"If the Minister approves these locations for salmon farming he'll be deliberately overriding the communities' well-negotiated decision on where salmon farming should take place in the Sounds.

“Salmon farming in the Sounds will not be sustainable if it does not have the support and buy-in of the people in Marlborough.

“There is an obvious alternative option, and that is for King Salmon to simply reduce the number of fish and amount of feed that it uses on existing sites.

"The only reason this isn't the major option being considered by the Minister is that it will cut into King Salmon's profits.”

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