SOPI DEC FINAl 2021 Without Embargo

Situation and Outlook for Primary Industries – December 2021
Situation
Situationand
and
Outlook
Outlookfor
for
Primary
PrimaryIndustries
Industries
December 2021
December 2021
Ministry for Primary Industries
SOPI December 2021
Contents
Introduction
Minister's foreword
02 Director-General's
introduction 03
Food and fibre sector
in the New Zealand 04 Sector summary
07
economy
ISBN 978-1-99-102604-0 (print)
ISBN 978-1-99-102603-3 (online)

Overview
10 The Māori
primary sector 22
Sector briefs
Dairy
32 Meat and wool
38
Forestry
44 Horticulture
50
Seafood
60 Arable
66
Processed food and
other products 72
1
Ministry for Primary Industries SOPI December 2021
Minister’s Director-General’s
Foreword introduction
It’s my pleasure to present the December 2021 update of the This includes a steady stream of new projects with support This December 2021 Situation and Outlook for Primary COVID-19 related challenges such as global freight issues
Situation and Outlook for Primary Industries (SOPI). from the Sustainable Food and Fibre Futures (SFF Futures) Industries (SOPI) provides an update on the outstanding and subdued activity in the restaurant sector continue. The
fund. Since mid-2018, the Government has committed around export performance of our food and fibre sector, as well as sector continues to work with MPI to respond to COVID-19 to
This SOPI shows the results of the enormous efforts of our $160 million to approved SFF Futures programmes of a total the opportunities and challenges ahead. keep people safe and businesses operating. MPI is committed
food and fibre sector to meet the demand for New Zealand’s investment of nearly $355 million. to continuing its work with the sector to help navigate
products. It forecasts export revenue will cross $50 billion for the first these issues.
We reached a significant milestone in October, with time, hitting a record $50.8 billion in the year to 30 June
We’re expecting total export revenue for our food and fibre agreement in principle for the New Zealand-United Kingdom 2022, an increase of 6 percent over the previous year. MPI is also committed to supporting further innovation, value
exports to reach a record $50.8 billion in the year to 30 June Free Trade Agreement (NZ-UK FTA). growth and sustainability in the food and fibre sector through
2022, representing a net increase of 6 percent from the The sector should be very proud of this result, and it shows our Sustainable Food and Fibre Futures fund and growing
previous year. This is an impressive result, particularly as we Once fully implemented the NZ-UK FTA will eliminate that the future of the food and fibre sector remains bright. the food and fibre workforce through our Opportunity Grows
navigate the challenges from COVID-19. customs tariffs on all of our food and fibre exports to the UK. Here campaign and the many other initiatives under way.
Many will be eliminated from the FTA’s entry into force such As you’ll see from this SOPI, there is strong demand for
As you’ll see, we are expecting growth in most sectors. For as wine, honey, onions, and some dairy products. This will our food and fibre products as consumers around the We’re also investing in community initiatives such as
example, export revenue for dairy, meat, horticulture and help to ensure New Zealand exporters are able to compete world look to healthier food and natural fibres with strong catchment groups to help improve land management
forestry are looking bright, and our seafood exports have on a level playing field in the UK market, and will open up environmental credentials. practices and freshwater quality and boosting uptake of
bounced back. valuable new opportunities for New Zealand exports. integrated farm planning to make it easier for farmers and
With the export performance tracking well and our Fit for a
COVID-19 is challenging every economy across the world Better World – Accelerating our Economic Potential roadmap growers to do business and achieve their goals.
In terms of skills demand, our Opportunity Grows Here
and touching every single life. We’ve been very fortunate to campaign is connecting New Zealanders with rewarding and guiding the food and fibre sector’s efforts in New Zealand’s These initiatives will help enable New Zealand’s primary
have had an economy that’s kept ticking due to our health- fulfilling jobs in the sector. The Government also recently economic recovery, I’m optimistic and excited about producers to demonstrate their environmental credentials in
focused COVID-19 response, which has been backed by New approved one-way quarantine-free travel for Recognised the future. a global market that is increasingly values-based and drive
Zealanders. Together we’ve kept ourselves safe so we can Seasonal Employer (RSE) workers from Vanuatu, Samoa further value in our products.
continue to do business, and this SOPI points to the benefit Growth in total export revenue is expected for most of our
and Tonga and this is providing much-needed support to sectors including dairy, meat and wool, horticulture, seafood,
of these efforts. our horticulture sector and our pacific neighbours. Around I’m encouraged by the resilience of the food and fibre sector
forestry and arable. in responding to COVID-19. I’d like to acknowledge the
We can’t stand still though. 9,000 migrants now have the opportunity to go through
the Government’s one-off simplified pathway to residence, We’re seeing robust demand for New Zealand products, 367,000 people who go to work each day in the sector – our
Our continued success depends on our ability to produce which will give certainty for them, their families and their such as our dairy products, our logs and sawn timber and farmers, growers, fishers, foresters, and processors – for
higher-value food and fibre products, successfully innovate, employers. our horticultural produce. Meat and wool exports are also their continued efforts in operating businesses, supporting
reduce environmental impacts and ensure we attract and a highlight with our red meat helping to meet the global each other, protecting people from COVID-19, and for their
retain the necessary workforce. I’d like to acknowledge the work of our food and fibre sector, shortage of protein. Our seafood exports are recovering part in driving New Zealand’s economic recovery.
particularly during the outbreak of the COVID-19 Delta with further growth forecast, and processed food and arable
To that end, we are making progress in delivering our Fit variant. It has been tough, but the sector has shown its exports are also performing well.
for a Better World – Accelerating our Economic Potential resilience and can-do attitude.
roadmap. It both supports farmers and growers to capture
opportunity as consumer values shift, and helps drive our This forecast record performance in the face of COVID-19 is
recovery from the pandemic. something that we should all be extremely proud of.
Hon Damien O’Connor Ray Smith
Minister of Agriculture Director-General,

Ministry for Primary Industries
2 3
Food and fibre sector in

the New Zealand economy
$50.8 billion in export revenue
(forecast, year to 30 June 2022)
82% of trade
The food and fibre sector accounted for 82.4 percent of New Zealand’s merchandise exports in the year to
30 June 2021. This ratio has increased steadily over the past decade, with primary industry export growth
exceeding that of non-primary industries for the past nine years.
11% of GDP
The food and fibre sector accounted for 11.2 percent of New Zealand’s GDP in the year to 31 March 2020. This
figure includes both the production of primary products, such as dairy cattle farming and the subsequent
processing and commercialisation industries such as dairy product manufacturing.
14% of employment
367,000 people are employed in New Zealand’s food and fibre sector as of 20191, representing 13.8 percent
of the total workforce. Primary production employment is distributed across the country, but processing and
commercialisation activities are concentrated in Auckland and other major population centres.
1
Most recently available data. Human capability in the Primary industries - 2002-2019 Overview (MPI).
4 5
Sector Food and fibre sector exports have performed better than expected over the
COVID-19 period to date. Food and fibre sector exports fell 1 percent to $47.7 billion
summary
in the year to 30 June 2021. Looking ahead to the year to 30 June 2022, food and
fibre sector export revenue is forecast to increase by 6 percent to $50.8 billion with
strengthening export revenue in the dairy, meat and wool, forestry, horticulture,
seafood and arable sectors.
Dairy
Dairy export revenue is forecast to increase 10 percent to $20.9 billion in the year to 30 June 2022.
This increase is being driven by weaker supply from key dairy exporting regions and strong demand for dairy
from large importing nations such as China. High export prices are likely to result in a record high farmgate
milk price. Milk production for the 2021/22 season is forecast to decrease by 1.5 percent. The industry is
facing COVID-19 related disruptions, high freight costs and rising farm input costs.
Meat and wool

Meat and wool export revenue is forecast to increase 6 percent to reach $11.1 billion in the year to
30 June 2022. Meat and wool export prices are recovering strongly, supported by a global protein shortage,
economies reopening and restaurant activity beginning to recover. Global meat supplies are tight due to
African swine fever reducing pork production and limited beef exports from Brazil, Argentina and Australia.
Wool and animal hide/skin exports have begun to recover. Global freight issues and subdued restaurant
activity continue to limit returns.
Forestry
Forestry export revenue is forecast to increase 3 percent to $6.7 billion for the year to 30 June 2022. Growth in
the Chinese construction industry in particular and the US housing market are showing signs of a slowdown.
Targeted measures by the Chinese Government and the US Government to support their economies and
infrastructure development are expected to support demand for our key forestry products over the medium-
term. In addition, domestic timber demand is expected to remain strong due to robust housing demand.
Horticulture
Horticulture export revenue is forecast to rise nearly 5 percent to $6.9 billion for the year to 30 June 2022.
Increased production for kiwifruit and apples is expected over the period. However, lower prices due to
very large avocado crops in New Zealand and Australia, and a reduced grape harvest in 2021 will decrease
export revenue for these sectors. Consumer demand for fresh fruit and wine has remained strong despite
COVID-19 related disruptions, and this is expected to continue. Growers and exporters continue to adjust their
operations around the challenges presented by the seasonal labour supply shortages, logistics constraints
and higher costs of shipping and production.
Seafood
Seafood export revenue is forecast to rise 2 percent to $1.8 billion in the year to 30 June 2022. The seafood
sector continues to face COVID-19 related challenges. Price and volume volatility experienced throughout
2020 and 2021 is expected to continue. Food service closures, challenging freight logistics and lower
consumer spending are starting to alleviate as countries open, which all contribute to a small forecast
increase over the period to 30 June 2022.
Arable
Arable export revenue is forecast to increase 6 percent to $275 million in the year to 30 June 2022. Demand
for New Zealand’s arable exports remains solid. Key drivers include weather-related production issues in
the northern hemisphere as well as low global inventories. Additionally, lockdowns in other countries have
resulted in an increase in home gardening and, as a result, a rise in vegetable and grass seed demand. The
outlook for the domestic cereal market is positive with feed grain prices steadily increasing through 2021 and
strong demand from the dairy sector expected to hold through 2022.
Processed food and other products

Export revenue from processed food and other products is forecast to remain stable at nearly $3.1 billion in
the year to 30 June 2022. Growth in revenue from live animals and soups/condiments is forecast to make up
for decreases in other forecast groups. Global logistics challenges and high domestic inventories of honey
are weighing on revenues. High revenues from live animal exports are expected to continue into 2022 due to
strong demand from China.
6 7
Overview
8 9
Overview
Figure 1: NIWA expects a warm summer with the possibility of La Niña returning
Date: 1 December 2021
Table 1: Food and fibre sector export revenue 2017-23

Year to 30 June 2021, NZ$ million
Actual Forecast
Sectors 2017 2018 2019 2020 2021 2022 2023
Dairy 14,638 16,655 18,107 20,135 19,093 20,930 20,310
Meat & wool 8,355 9,542 10,176 10,678 10,391 11,050 11,000
Forestry 5,482 6,382 6,883 5,539 6,531 6,720 6,850
Horticulture 5,165 5,392 6,134 6,555 6,582 6,900 7,150
Seafood 1,744 1,777 1,963 1,855 1,772 1,800 1,840
Arable 197 243 236 290 260 275 280
Processed food and other 2,639 2,709 2,854 3,006 3,112 3,090 3,080
products*
Source: NIWA.
Total export value 38,220 42,700 46,355 48,058 47,741 50,765 50,510
Year-on-year % change 2% 12% 9% 4% –1% 6% –1% Recent Delta variant outbreaks have had a moderate
economic impact on countries with high vaccination rates. Climate Outlook
* Includes live animals, honey and processed food. However, these outbreaks have slowed near-term growth
Percentages in the table are rounded to the nearest whole percentage.
elsewhere and exacerbated global supply-chain issues Favourable conditions for many horticultural
Source: Stats NZ and MPI.
and costs. Vaccine access has emerged as a key driver crops generally resulted in a good harvest in
of global recovery with countries currently divided into 2021. However, low temperatures in spring
Food and fibre sector exports have performed better than Over the medium-term, uncertainties remain around the two groups: those anticipating further normalisation of 2020 affected the 2021 South Island wine
expected over the COVID-19 period to date. This has been speed of recovery from COVID-19 related disruptions. economic activities in the near-term (nearly all advanced grape harvest. Flooding in Canterbury in May
a hard year for our farmers, growers and fishers with Logistic constraints are expected to ease, while export economies) and those still facing recurring outbreaks and 2021 caused severe damage on some arable
some sectors affected more than others by domestic and demand is forecast to increase as vaccination rates allow for rising COVID-19 death tolls. However, even in countries farms, and while a dry autumn slowed autumn-
international lockdowns, continued supply-chain disruptions greater economic recovery. However, this upward trend is where infection rates are already very low, recovery is not sown crops, drier conditions in late September
and rising freight costs. Post-lockdown lifts in consumer forecast to be offset by flat dairy production and, a softening guaranteed as long as the virus spreads elsewhere. assisted spring planting.
confidence, demand and prices have also benefited some of meat and dairy prices from recent highs. As a result,
sectors more than others. export revenue for the year to 30 June 2023 is forecast to Further driving the divergence is the continued impact of The winter of 2021 was New Zealand’s second
dip slightly across the sectors. Headwinds that could also sizeable fiscal support in the US and new measures in other warmest on record, and higher than average
Food and fibre sector exports fell 1 percent to $47.7 billion dampen the recovery include the possibility of a COVID-19 advanced economies including France, Germany, Italy, Korea temperatures continued into spring with October
in the year to 30 June 2021. While dairy, meat and wool, resurgence, the effect of international economic pressures, and the UK. frequently bringing warm humid conditions to
and seafood were impacted by COVID-19 related market a less favourable exchange rate or slower recovery in our many areas and normal soil moisture levels.
disruptions affecting prices and volumes, forestry recovered The International Monetary Fund (IMF) has reduced its However, in some dairy regions, pasture quantity
trading partners.
from the impacts of the New Zealand lockdown in early 2020 projections for global economic recovery by 0.1 percentage and quality in the early season since June has
with a large increase in log exports in 2020/21. Horticulture point in 2021 (as at October 2021). The downward revision for been reduced by cold wet weather. The declining
benefited from good harvest volumes and sustained demand 2021 reflects the economic impacts of supply disruptions and La Niña conditions going into winter have
for fresh produce during lockdowns. Vaccine rate disparities drive diverging worsening of COVID-19 infections in various countries. strengthened again and look likely to develop
economic recoveries between countries further in summer with NIWA moving to a La
Looking ahead to the year to 30 June 2022, food and fibre World real GDP growth is now expected to be 5.9 percent
Global economic growth has picked up this year, reflecting in 2021 and 4.9 percent in 2022. World real GDP is forecast
Niña alert at the end of October.
sector export revenue is forecast to increase by 6 percent to
$50.8 billion with strengthening export revenue in the dairy, strong fiscal and monetary policy support to mitigate the to reach US$90 trillion in 2021 and US$94 trillion in 2022. While rainfall is likely to be normal or below
meat and wool, forestry, horticulture, seafood and arable impacts of COVID-19, vaccine deployment and the resumption Beyond 2022, global growth is projected to moderate to normal for most regions, an elevated risk of
sectors. Increases in revenues are predominantly being of many economic activities. With economies reopening and about 3.3 percent over the medium-term with real GDP at tropical cyclones increases the likelihood of
driven by recovering and improving export prices. Global increased economic activity, global demand for primary US$101 trillion in 2024. The recovery track of global real GDP flooding and severe weather over summer. The
supply constraints in meat, dairy and arable are benefiting commodities has surged and boosted New Zealand exports. is presented in Figure 2. While global real GDP has risen to warm moist conditions also bring the risk of
our producers, while continued consumer demand for fruit pre-COVID-19 levels since 2021, it remains below the IMF’s disease to Hawke’s Bay summer fruit crops.
Global gross domestic product (GDP) has now exceeded its
and vegetables should see ongoing growth. However, there 2019 forecast. Temperatures are expected to be above normal
pre-pandemic level, but output and employment disparities
is ongoing volatility in some sectors such as seafood and throughout the country (Figure 1).
remain in many countries, particularly in emerging and
processed food that is limiting growth.
developing countries with lower vaccination rates and
policy support.
10 11
After an 8.2 percent dip in 2020, the volume of global goods Global commodity and shipping prices have Figure 2: World real GDP recovery path
and services trade is expected to rise by 9.7 percent in 2021 surged as economies reopen Year to 31 December, real GDP (US$ billion) in 2020 current prices
before levelling off at 6.7 percent in 2022. 2
Inflation rates have accelerated worldwide, exceeding most
The relatively positive short-term outlook for global trade central banks’ expectations. This is particularly the case
will continue to be strained by regional disparities, continued in the US, Canada, the UK and Europe as well as in some 2021 IMF outlook
weakness in services trade and lagging vaccination emerging markets and developing countries (Figure 4).
timetables, particularly in developing countries. COVID-19
remains the major threat to the outlook for trade as new In the US, the Federal Reserve recently lifted its forecast of 2019 IMF outlook
waves of infection could easily disrupt any hoped-for average inflation this year from 3.4 percent to 4.2 percent.
recovery. Less than a year ago, the Federal Reserve projected that
inflation would average just 1.8 percent in 2021. The US
central bank forecasts that inflation will fall to 2.2 percent in
2022, which is 0.4 percent higher than its December forecast.
The US consumer price index, a second and more generally
Supply chains remain constrained used inflation indicator, shows inflation peaking at an even
Social distancing rules, temporary closures and strengthened higher 5.3 percent annual rate.
hygiene requirements have increased the intervals between
The annual inflation rate in the Eurozone increased to
crew shifts, especially since the Delta variant’s proliferation
3.4 percent in September, the highest level in 13 years. 3
worldwide. This has slowed port processing times, hampered
Prices rose mostly due to a surge in energy costs
container returns to Asia and major US ports and caused
(17 percent for the year to September 2021), which was
delays throughout the entire shipping chain. This unusual Source: IMF, World Economic Outlook.
mostly a reversal of the oil price fall that occurred during
situation is likely to remain for the foreseeable future with
the COVID-19 pandemic. The impact from production and
significant extra shipping capacity not expected to appear
shipping bottlenecks was also showing in the inflation
until 2023.
figures as durable goods prices rose 2.3 percent from Figure 3: Shipping freight costs have surged over the last year
Since September 2021, record backlogs have been observed August. The annual inflation rate is expected to hit World container freight index, in US$ per 40-foot container
in the ports of Los Angeles and Long Beach, the primary 4.1 percent by the end of the year, twice the European
maritime gateways to the US for imports from China. More Central Bank’s target, before a swift decrease in early
recently, restrictions imposed in response to Delta variant 2022. According to the European Central Bank, energy price
outbreaks have resulted in massive port congestion in China pressures are likely to outlast other inflationary drivers such
with 386 ships anchored outside two of the world’s busiest as supply-chain disruptions.
container ports (Shanghai and Ningbo).
In some emerging markets and developing economies, price
In New Zealand, the ports of Auckland and Tauranga remain pressures are expected to persist because of elevated food
heavily congested due to backlogs in main transshipment prices, lagged effects of higher oil prices and exchange rate
ports around the world. Another possible reason causing the depreciation lifting the prices of imported goods. However,
delays is vessels bypassing New Zealand ports for more- great uncertainty surrounds inflation prospects primarily
lucrative routes between Asia and North America where stemming from the path of the pandemic, the duration of
freight rates are at record highs. supply disruptions and how inflation expectations may evolve
in this environment. Despite fast-rising producer prices and
Port congestion, reduced freight capacity and a critical recent increases in food prices, annual inflation in China
shortage of containers are driving up freight costs. Container has remained modest thanks to stable domestic supplies,
prices rose 365 percent from US$2,264 to US$10,525 per government support, low port prices and weaker domestic
40-foot container between 5 November 2020 and 5 November demand. The IMF expects the inflation rate to be around
2021 (Figure 3). 1.8 percent in China for 2022, comparatively lower than other
emerging economies.
COVID-19 related trade and supply-chain issues are putting a
Source: Freightos Baltic Index (FBI): Global Container Freight Index.
strain on producers’ ability to get their products to overseas Inflationary pressures have been driven by higher demand
markets. Exporters of time-sensitive perishables are keeping and increased cost pressures from COVID-19 related
their products in storage for longer periods and shifting their supply-chain issues. Renewed COVID-19 outbreaks are also
export products from fresh or chilled to frozen. Along with prompting certain countries to curtail their activity, resulting
high freight costs and uncertainty, this is likely to hamper in bottlenecks and strains on supply chains. As a result, the
primary sector export returns and profits. rate of inflation varies widely across global markets. These
acute global COVID-19 related supply-chain disruptions and
price increases are having a direct impact on New Zealand
producers. Their operating costs have risen, and their ability
to restock shelves and source inputs for production
has dwindled.
2
IMF, World Economic Outlook, October 2021
3
Eurostat, Flash estimate, September 2021, https://ec.europa.eu/eurostat/documents/2995521/11563291/2-01102021-AP-EN.pdf/18dab5f9-9b23-7635-cc31-9112465da2fb
12 13
G20 4 consumer price inflation is projected to ease from New Zealand exports have benefited from global Figure 4: Inflation has surged in the US and emerging market economies
4.5 percent at the end of 2021 to around 3.5 percent by the price increases for primary commodities Annual percent change
end of 2022, remaining above the rates seen prior to the
pandemic. COVID-19 related lockdowns and restriction measures around
the world have led to a substantial drop in demand-side
Brazil
According to the OECD 5, supply pressures will gradually inflation as people were unable to make some of their usual
reduce, wage growth will remain moderate and inflation purchases. As economies reopen, those purchases get made
expectations will stay unchanged. However near-term risks and inflation rises, especially as the forced savings from Russia
are still high due to significant uncertainty. Accelerated lockdowns are deployed.
vaccination deployment or a faster spending of household Global commodity prices have continued to climb in tandem
India
savings would boost demand and lower unemployment over the last few months, especially dairy and meat products
while potentially raising near-term inflationary pressures. (Figure 5).
Conversely, slow progress in vaccine rollout and continued USA
spread of new virus mutations would result in a weaker This upward trend in commodity prices has been supporting
recovery and larger job losses. New Zealand’s export revenues in the food and fibre sector
– a welcome indicator when tourism and hospitality sectors Euro area
(19 countries)
continue to struggle with the lack of international visitors.
In the June 2021 quarter, New Zealand exported $20.9 billion
China
New Zealand inflation is at a 10-year high of total goods and services, up from $19.3 billion in the June
2020 quarter. Dairy and forestry products were the major
Inflationary pressures in New Zealand have become more contributors to rising goods export prices during the
visible in recent months. Annual consumer price index (CPI) June 2021 quarter.
inflation rose to 4.9 percent in the September 2021 quarter
when compared with the September 2020 quarter. Annual • Dairy export prices increased 15.3 percent in the June
inflation was boosted by higher food and housing-related 2021 quarter, driven by increased demand for dairy
expenditures as well as another major increase in gas prices. products, mostly from China.
Source: OECD, Economic Outlook.
This was the biggest annual growth since inflation peaked at
• Export prices for forestry products increased
5.4 percent between the June 2010 and June 2011 quarters.
12.7 percent in the June 2021 quarter, thanks to
Figure 5: World commodity prices continue to climb
While more inflation was projected given historically low sustained demand for New Zealand logs, especially
World commodity price indices (January 1986 = 100)
interest rates and increased government spending, the from China.
4.9 percent inflation rate is higher than many economists
• Other primary products also increased in price in the
predicted. It exceeds the Reserve Bank of New Zealand Policy
June 2021 quarter, with export prices for meat up
Targets Agreement, which aims to maintain CPI inflation
6.8 percent. Dairy products
between 1 percent and 3 percent on average over the
medium-term. On the import side, international oil prices have been
Meat, skins and wool
trending up since last year, mostly driven by increased
Similarly to the rest of the world, prices of goods in New products
global demand for oil as economies recover from COVID-19.
Zealand have risen due to supply-demand mismatches. On
Higher oil prices combined with freight costs on the rise are
the supply side, labour shortages, COVID-19 related supply- Forestry products
likely to reduce gains in New Zealand’s terms of trade over
chain disruptions and higher shipping costs led to higher
the remainder of 2021.
production costs. New Zealand’s significant fiscal and
monetary policy stimulus as a response to COVID-19 has Horticulture products
supported economic activity, allowing for a strong recovery

in demand and driving up consumer and food prices further. Primary product exports benefit from an easing
Recent inflation pressures also reflect a partial catch-up in in the New Zealand dollar
commodity prices from last year’s low levels. This is due to
COVID-19 related restrictions limiting the extent to which While the New Zealand dollar (NZD) has maintained its Source: ANZ.
prices could increase at the time. strength against all other major currencies over the year,
it has slightly eased against the US dollar (USD) since its
While New Zealand primary producers are receiving higher record high in February 2021 when the NZD/USD went
prices for their commodities, they are also facing higher above US$0.74. The easing of the NZD is mostly driven by
input prices such as fuel and fertilisers, which put pressure the appreciation of the USD, which benefits from the strong
on their margins and profitability. American recovery, as opposed to the more mixed outlook in
other countries (Figure 6).
The Reserve Bank of New Zealand raised the official cash

rate by 0.5 percent in early October – a sign that it intends
to keep inflation under control. Rising expectations for
additional interest rate hikes from the Reserve Bank are
likely to support the NZD against the USD and other major
currencies. The Reserve Bank is expecting the NZD to remain
strong for the rest of the year and to ease over 2022.
4
The G20 (or Group of Twenty) is an intergovernmental forum that includes the European Union and 19 other countries. The G20 is composed of most of the world’s largest
economies, including both industrialised and developing nations, except New Zealand.
5
OECD, Economic Outlook, Interim Report, September 2021.
14 15
However, the strength of the NZD might be reduced when US economic growth is also showing signs of a slowdown
Figure 6: NZD exchange rates appreciating over the last 12 months
central banks overseas begin tightening their monetary due to supply-chain disruptions, a resurgence of COVID-19
NZD exchanges rates against selected currencies, October 2018 - November 2021
policies and raise their interest rates to fight growing and weaker consumer spending on goods and services. In
inflationary pressures. While most central banks announced the September quarter 2021, US GDP rose by 2.0 percent,
in early November holding their interest rates low for now, the lowest quarterly growth since the COVID-19 recession
some are starting to scale back policy support. in the June quarter 2020 and below the 2.7 percent growth NZD/USD
initially forecast. The IMF has reviewed its forecast down

The US Federal Reserve announced in early November that by a full percentage point to 5.9 percent, the steepest drop NZD/GBP
it will taper a bond-buying programme over the coming suffered by any developed economy.
months and likely end it by mid-2022. The Reserve Bank of
England has announced that it will likely raise its interest The European Union and the UK are showing stronger NZD/EUR
rate in coming months if the economy continues to recover signs of recovery thanks to increased vaccination rates and
as projected. Conversely, the European Central Bank has support schemes. After a 6.3 percent recession in 2020, the
announced it is unlikely to raise its interest rates in 2022 as European Union’s GDP is forecast to grow by 5.0 percent in
inflation over the medium-term remained subdued. 2021 and 4.3 percent in 2022. Britain’s GDP is forecast to rise
by 6.8 percent in 2021, although the 9.7 percent recession
in 2020 implies that Britain’s economic recovery will take
longer than most developed economies.
New Zealand export performance hinges on the
recovery of its main trading partners
New Zealand’s export growth will continue to depend on the
New Zealand is progressing on free trade deals
economic recovery of its main trading partners. While still
at a difficult time
looking positive, the GDP growth forecast has been revised Source: RBNZ.
down in most of these countries as they continue to face In late October, New Zealand and the UK reached an
supply-chain issues, Delta variant outbreaks, inflationary agreement in principle on key elements of a free trade
pressures and softening consumption. deal. The agreement in principle outlines the removal of
97 percent of tariffs on goods once the final agreement
While China’s economy outperformed the rest of the world
enters into force. Wine, honey, onions and hoki are amongst
during COVID-19, latest GDP figures suggest the economic
the immediate beneficiaries of complete tariff reductions.
recovery is losing momentum. In the September 2021
Wine is New Zealand's largest export to the UK, with
quarter, China’s GDP rose by 4.9 percent year on year,
$445 million in export revenue for the year to 30 June 2021.
falling short of a 5.2 percent growth forecast. The Chinese
The removal of the current customs duty ($50 per 100 litres)
economy has recently been under pressure from the property
represents a potential $14 million in savings for the wine
sector crisis, a surge in coal and electricity prices, higher
sector. All tariffs on apples and mussels will be removed
raw material costs and weakening of consumer confidence.
after three years. Butter and cheese exports will become
Despite these challenges, GDP growth is forecast to reach
tariff-free after five years, with transitional quotas increasing
6–9 percent for 2021. China’s domestic COVID-19 situation
annually until then. Beef and sheep meat exports will be
remains stable with outbreaks being dealt with quickly and
duty-free in 15 years.
vaccines distributed widely.
The UK, China and Chinese Taipei have each submitted
Australia has been hit by extended lockdowns since the
formal accession requests to join New Zealand and 10 others,
beginning of the pandemic, which have driven consumer
in the Comprehensive and Progressive Agreement for Trans-
and employer uncertainty. In October 2021, the IMF cut its
Pacific Partnership (CPTPP). The focus of the accession
forecast for Australia’s GDP growth to 3.5 percent for 2021,
process with prospective new members will be on ensuring
down from 5.3 percent previously. However, the forecast for
compliance with CPTPP’s rules and the high standard
Australian’s GDP growth for 2022 has been revised up from
of commitments.
3.0 percent to 4.1 percent, mainly driven by expectations of a
strong recovery of private consumption and investments.
17
16
Recent Delta variant outbreak and lockdowns Table 2: Export forecast comparison 2017–23
change New Zealand near-term outlook Year to 30 June 2021, NZ$ million
New Zealand GDP increased 2.8 percent in the June 2021
Actual Forecast
quarter following a 1.4 percent increase in the March 2021
quarter. These figures, well above market expectations of Sectors Forecast round 2017 2018 2019 2020 2021 2022 2023
1.1 percent GDP growth, confirm New Zealand’s economic
resilience prior to the recent Delta variant outbreak and Dec 2021 14,638 16,655 18,107 20,135 19,093 20,930 20,310
Dairy
subsequent lockdowns. Jun 2021 14,638 16,655 18,107 20,135 19,050 20,420 20,730
Difference – – – – 43 510 – 420
The post-lockdown recovery has begun. In October 2021,
New Zealanders spent $645 million (9.5 percent) more on Meat and wool Dec 2021 8,355 9,542 10,176 10,678 10,391 11,050 11,000
their credit and debit cards when compared with the previous Jun 2021 8,355 9,542 10,176 10,678 10,380 10,420 10,660
month. However, card spending for October 2021 was lower Difference – – – – 11 630 340
than before the country went into lockdown in the second
Dec 2021 5,482 6,382 6,883 5,539 6,531 6,720 6,850
half of August. This shows the overall economic recovery Forestry
has been constrained by Auckland remaining at higher alert Jun 2021 5,482 6,382 6,883 5,539 6,250 6,430 6,520
levels than most of New Zealand. Difference – - – - 281 290 330
Dec 2021 5,165 5,392 6,134 6,555 6,582 6,900 7,150
New Zealand’s economic growth is likely to remain modest Horticulture
for the year to 31 December 2021. This is mostly due to the Jun 2021 5,165 5,392 6,134 6,555 6,650 6,780 7,260
recent Delta variant outbreak, borders remaining closed to Difference – – – – – 68 120 – 110
most countries and continued global supply-chain issues. Dec 2021 1,744 1,777 1,963 1,855 1,772 1,800 1,840
Seafood
Jun 2021 1,744 1,777 1,963 1,855 1,780 1,730 1,830
Difference – – – – –8 70 10
Arable Dec 2021 197 243 236 290 260 275 280
Jun 2021 197 243 236 290 270 280 290
Difference – – – – – 10 –5 – 10
Processed Dec 2021 2,639 2,709 2,854 3,006 3,112 3,090 3,080
food and other Jun 2021 2,639 2,709 2,854 3,004 3,080 3,000 3,000
Forecast tracking
products*
Difference – – – 2 32 90 80
Total export value Dec 2021 38,220 42,700 46,355 48,058 47,741 50,765 50,510
Jun 2021 38,220 42,700 46,355 48,056 47,460 49,060 50,290
Export revenue for the year to 30 June 2022 has been revised upwards compared with our forecast in June 2021 (Figure 7)
Difference – – – 2 280 1,705 220
with stronger export prices due to recovering demand. Individual sector revisions are shown in Table 2.
* Includes live animals, honey and processed food.
Source: MPI.
Figure 7: MPI export revenue forecast
Year to 30 June, 2016–23
SOPI Dec 2021
SOPI Dec 2020
SOPI Jun 2021
18 19
Top 10 export destinations Top export markets

Year to 30 June 2021, NZ$ million Year to 30 June 2021, NZ$ million and percent
Export revenue % of total Export revenue % of total
Dairy 19,093 40% Meat and wool 10,391 22%
Forestry 6,531 14% Horticulture 6,582 14%
Seafood 1,772 4% Arable 260 1%

Processed food and 3,112 7% Total 47,741 100%
other products Source: Stats NZ.
20 21
The Māori agribusiness in numbers
$2.4B 1.4M 22,500 32%

primary sector
contribution to hectares of Māori working in of Māori
New Zealand GDP Māori-owned land agriculture, forestry businesses are in
and fishing primary industries
The Māori primary sector makes a significant contribution to the New Zealand economy. As at
June 2018, 5.7 percent of Aotearoa was in Māori ownership, most of which is in Māori freehold
title. Māori freehold land is governed by collective structures and passed down from generation
to generation. Māori are actively involved in the primary sector and are successfully generating
The Māori primary sector asset base has grown
revenue, creating jobs and opportunities and building an economic base.
significantly between 2013 and 2018
Deeply embedded within the primary sector Grounded in unique values
108%
Māori are significant participants in the primary industry, Māori have always had strong cultural and spiritual values
not just as a Tiriti partner and kaitiaki but also as and practices that are associated with the growing and
landowners and asset holders, innovators and leaders. harvesting of food and other materials. These values
They have a long history of primary production, exporting and practices continue today, placing the care of the
goods overseas prior to the signing of te Tiriti o Waitangi environment and its people at the heart of Māori identity.
in 1840. Māori agribusiness is an area of significant and
sustained growth, driving economic development at both
regional and national levels.
At the forefront of productivity and 61%
35%
innovation
Sustainability focused Māori are at the forefront of productivity with higher rates
of innovation and R&D than other New Zealand firms. 6
Māori agribusiness is increasingly recognised for the These ‘frontier firms’ are underpinned by tikanga Māori
value it provides, not only to its direct participants and take an intergenerational view. The longer-term Māori primary Māori primary Total Māori
and shareholders/beneficiaries, but also to its wider investment horizons are already paying dividends for some sector value sector asset base growth
community and Aotearoa as a whole. A quadruple bottom Māori agribusinesses such as Kono, which has a 500-year added GDP growth asset base growth
line approach distinguishes Māori agribusiness, ensuring plan spanning seafood, beverages (wine, cider, hops),
that environmental outcomes, as well as intergenerational horticulture and food products.
wealth creation, sit alongside social responsibility and
cultural revitalisation.
Globally recognised and appreciated
A recent white paper from the Our Land and Water
Māori-produced goods are underpinned by strong cultural
National Science Challenge identifies the approach guiding
and environmental values. As such, they are highly
the Māori primary sector as an opportunity for Māori to
regarded globally. According to a recent survey conducted Source: BERL, 2018.
lead the transition to a sustainable land-based economy
by Lincoln University’s Agribusiness and Economics
nationally – supporting a shift from a volume to a value
Research Unit, British consumers placed a high level of
based-approach.
trust in food produced by Māori enterprises. As a result,
Significant growth
food with Māori branding commanded a 43–50 percent The total Māori economy is estimated to be worth $68.7 billion and grew by 61 percent between 2013 and 2018. The
price premium in British markets. Māori entities and small Māori agriculture, forestry and fishing asset base experienced 108 percent growth over the same timeframe. The Māori
to medium-sized enterprises are already capitalising horticulture asset base has grown by 300 percent since 2006. 7
on their international appeal, with the Productivity
Commission finding that they are more likely to export
than their non-Māori counterparts.
6
Productivity Commission, New Zealand firms: Reaching for the frontier, 2021. 7
BERL, Te Ōhanga Māori 2018: The Māori Economy report, 2018.
22 23
Māori Agriculture, forestry and fishing asset Agriculture, forestry and fishing assets as
base worth $23 billion in 2018 a percentage of total assets varies by rohe
45%
Te Tai Tokerau
3%
Tāmaki Makaurau
37%
Te Moana ā Toi-Waiariki
49%
Waikato
67%
47% Tairāwhiti
Te Tai Hauāuru
33%
Sheep and beef Dairy Forestry Tākitimu
$8.6B $4.9B $4.3B 13%

Te Whanganui ā Tara 69%
Kurahaupō
25%
Te Tau Ihu
32%
Waitaha
Fishing and aquaculture Other agriculture Kiwifruit growing Other

horticulture
$2.9B $1.4B $0.7B
$0.5B
Source: BERL, 2018. Source: BERL, 2018.
Account for a sizeable amount of primary Integral to regional economic development Characterised by lower debt and higher
sector assets Māori-led initiatives are gaining traction across the profit levels
As at 2018, the Māori agriculture, forestry, and fishing country as key drivers of regional economic development. BERL’s Te Ōhanga 2018 report on the Māori economy 8
asset base was estimated as $23.4 billion. Sheep and beef Ninety Treaty settlements have now been finalised found that Māori firms within the primary sector had lower
farming have the highest concentration of Māori primary with iwi/hapū groups and there is a large body of long- average debts than their non-Māori counterparts. They
sector assets, accounting for 37 percent of the total asset established Māori trusts and incorporations. also earned higher profits than comparable non-Māori
base. Dairy and forestry are ranked second and third, with While this development is occurring across the country, firms across seafood, primary processing and dairy.
21 percent and 19 percent in Māori primary sector more than half of the natural resource-based assets
assets, respectively. Fisheries and aquaculture account
for 13 percent and kiwifruit growing accounts for
in agriculture, horticulture, forestry and fishing are Provide considerable employment
concentrated in the four rohe of Waikato, Te Moana ā
3 percent. In 2018, employment figures recognised 22,500 Māori
Toi-Waiariki, Waitaha and Te Tai Hauāuru.
working in agriculture, forestry, and fishing. These figures
do not include Māori working in adjacent sectors such as
manufacturing, food and processing.
8
BERL, Te Ōhanga Māori 2018: The Māori Economy report, 2018.
25
Backing the Māori primary sector The Ahuwhenua trophy

The Ahuwhenua Trophy, an award launched by Tā Apirana Ngata and
Lord Bledisloe in 1933, highlights the long history of Māori excellence
in farming. Today, the fiercely contested competition rotates annually
between dairy, sheep and beef, and horticulture, as well as awarding a
Young Māori Farmer/Grower of the Year title every year.
MPI is the principal provider of government

support for Māori in the primary sector
Services tailored to the specific needs of Māori landowners regionally-based Māori agribusiness advisors, who work
and agribusinesses can be accessed alongside the general directly with Māori landowners to deliver whenua Māori-
support available to the primary sector. MPI has dedicated specific programmes.
Māori Agribusiness
Māori Agribusiness
Pathway to Increased He Ara Mahi Hou
Extension (MABx)
Productivity (MAPIP)
One-to-one support for Focuses on providing shared, Funding for feasibility studies
individual land blocks to group learning opportunities by Māori entities for Māori
explore land use and develop exploring options for to build workforce skills and
options. sustainable system changes. capability in the primary
sector.
Participants in these programmes are able to progress to other sources of support within MPI, including funding available
through Sustainable Food and Fibre Futures. Other government agencies, such as Te Puni Kōkiri, the Ministry of Business,
Innovation and Employment, and New Zealand Trade and Enterprise, can also provide support to participants.
In addition to programmes and services, Māori are partners in key government policy relating to the primary sector,
particularly on climate change, freshwater and resource management. Māori are actively involved in shaping the evolving
regulatory landscape and setting sector strategies.
Quinn Morgan, winner of the 2021 Ahuwhenua

Young Māori Farmer Award for dairy
26 27
The champions
Ngā Pouwhiro Taimatua

MPI has recently established Ngā Pouwhiro Taimatua, a
forum of experienced Māori primary sector practitioners.
The group meets regularly to provide advice and insights
to MPI on current and future priorities and opportunities
relating to Māori in the primary sector. The group is
helping develop a strategic approach to guide MPI’s
support for Māori in the primary sector over the coming
years.
Ngā Pouwhiro Taimatua has noted the current lack of data
specific to the characteristics and needs of Māori in the primary sector. Ngā Pouwhiro Taimatua has identified
improving data as a key workstream to be developed with other agencies and with Māori to support good decision-
making and help measure progress and change. Ngā Pouwhiro Taimatua also strongly advises that improved
programme delivery and coordination to assist Māori primary sector efforts will deliver great impact and
contribute to our wider effectiveness and efficiency.
We anticipate this work, along with other MPI initiatives, will strengthen its capability to create open and fruitful
partnerships with Māori-owned businesses, iwi and Māori collectives with land, assets and interests in the
primary sector.
Ngā Pouwhiro Taimatua members and MPI staff, in photograph from left to right: Richard Bradley, Judith MacDonald, Douglas Macredie, Julie Collins, Mikaere
Berryman-Kamp, Traci Houpapa (Chair), Bob Cottrell, Ray Smith, Raniera Bassett, Nadine Tunley, Te Kapunga Dewes, Riri Ellis, Turei Reedy, Tane Bradley, Richard
Manning. Ngā Pouwhiro Taimatua members not pictured: Dr. Tanira Kingi, Ingrid Collins.
Whangaparāoa MABx cluster

Miro
The Whangaparāoa Māori Lands cluster brought together The programme’s next phase will look at 10 different crops,
owners of 25 Māori land blocks covering 18,000 hectares. Miro is a collective of Māori food producers. It consists of
including livestock tactical grazing to rotate with cropping.
It began in 2019 as one of the first clusters under MPI’s 30 iwi, hapū, land trusts, whānau and Māori authorities
A number of trial crops, including taewa, kūmara, edamame
Māori agribusiness extension (MABx) programme 9. across Aotearoa. They all share a foundation of
beans, and peanuts have now been planted with the support
kaupapa Māori values and business approach. Lifting
of Plant & Food Research to understand how the crop will
The cluster began by commissioning an inventory of the productivity of Māori-owned land and providing
grow in the area.
natural resources including soils, topography, waterways, career opportunities for Māori, especially rangatahi,
current vegetation and climate data. will be critical to creating sustainable returns for Miro’s
shareholders.
• 88 percent of the land is steep hill country suitable for
retiring and allowing reforestation of native trees or Miro has recently received funding from MPI’s Sustainable
Food and Fibre Futures. This funding will help establish
planting exotic plantation forestry.
and operate protected cropping systems, starting with
• 12 percent of the land can be used for less-intensive blueberries. Miro’s project aims to transition 310 hectares
pastoral systems, including 5 percent of the land that is of underutilised Māori-owned land into high-value
suitable for high-value crops. horticulture, creating 565 jobs over the next five years.
Miro currently has 12 orchards and over 50 hectares of
Landowners in the cluster also stated their social, cultural,
blueberries grown under cover. The current focus is on
economic and environmental aspirations at a hui. These
blueberries with the aim to build a business based on
aspirations were then used to guide assessments of
global demand for the berries high nutritional value. Miro
potential land use.
plans to investigate a wider range of fresh food options in
The cluster started out discussing 72 potential land use the future.
options. Over the next 18 months, it narrowed them down
to 10, then four, before deciding on land uses to pursue.
Participants were able to specify whether they preferred a
sustainable mixed land use model or a single crop model.
9
https://www.mpi.govt.nz/funding-rural-support/maori-agribusiness-funding-support/maori-agribusiness-extension-mabx-programme
28 29
Sector Briefs
30
Dairy
Dairy export revenues are forecast to increase by 10 percent to $20.9 billion in the year to
30 June 2022 despite a forecast fall in milk production this season. Driving this increase is
a weakening in supply from key dairy exporting regions and strong demand for dairy from
large importing nations such as China. Resulting high export prices are likely to lead to a
strong farmgate milk price. The industry continues to face COVID-19 related disruptions,
high freight costs and rising farm input costs.
Table 3: Dairy export revenue 2017–23

Year to 30 June, NZ$ million
Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Whole milk powder 5,271 5,818 6,675 7,565 7,581 8,200 7,790
Butter, anhydrous milk 2,794 3,812 3,612 3,365 2,670 3,270 3,140
fat and cream
Skim milk and butter 1,385 1,228 1,323 1,792 1,535 1,810 1,660
milk powder
Casein and protein 1,735 1,601 1,574 1,997 2,007 2,310 2,250
products
Cheese 1,830 1,905 1,965 2,074 2,064 2,230 2,280
Infant formula 778 1,240 1,641 1,851 1,579 1,350 1,530
Fluid milk and other 845 1,050 1,318 1,492 1,655 1,760 1,660
dairy products*
Year-on-year % change 10% 14% 9% 11% –5% 10% –3%
* Includes liquid milk and cream, ultra-high temperature milk, yoghurt and ice-cream.
32 33
Top export markets Slow pasture growth impacts early season milk Demand for dairy has been strong, driven largely by
production increasing demand for dairy imports from China. Other
Year to 30 June 2021, NZ$ million and percent regions, especially dairy importing nations in Asia, are also
Sluggish pasture growth in most dairying regions from June helping keep demand firm. More recently, increased dairy
to October has resulted in a weak start to the season. Cold imports (specifically skim milk powder and cheese) from
and wet weather has reduced both the quantity and quality African nations have further strengthened global demand. In
of early season pastures. Farmers are also facing high input the short to medium-term, global demand for dairy products
costs, and dairy cow numbers are likely to have declined this is expected to be reasonably stable, supported by good
season. As a result, total milksolids production from June to economic recovery from the pandemic in key dairy markets
September is down 3.1 percent compared with the previous and the return to normal levels of operation by the food
season. Milksolids production in August and September was service sector.
down by 4.2 and 4.0 percent respectively compared with the
previous season. As temperatures increase and paddocks dry Strong demand and weakening supply has resulted in high
out, pasture conditions should improve. Higher soil moisture global dairy prices this season (Figure 9). The weighted
levels could also help extend pasture and crop growth average GDT price in the 2021/22 season to 16 November
through late spring and early summer. Due to improved 2021 was 15 percent higher than the weighted average price
conditions, milksolids production is forecast to make up for for the 2020/21 season. Similarly, the Food and Agriculture
some of the lost ground. However, total milksolids production Organization dairy price index was up 15 percent in October
is likely to decline by 1.5 percent for the 2021/22 season 2021 compared with October 2020. The demand-supply
compared with the record production of last season imbalance is likely to persist for the short to medium-term,
(Figure 8). keeping dairy prices high. This is further reflected in the
dairy futures market, which, as of 17 November 2021, is
holding firm across the key commodities.
Global dairy prices remain high on the back of

weakening supply and strong demand
New Zealand dairy exports revenues are
In addition to the decline in New Zealand milk production, forecast to increase significantly
milk supply growth in critical dairy exporting nations is also
Despite the decline in milksolids production, dairy exports
forecast to weaken. Due to high feed costs and lower cow
have had a strong start to the season. Export revenues in the
numbers in the US, milk production grew by only 0.2 percent
September 2021 quarter were up 14 percent compared with
in September, the smallest gain in milk production in
the September quarter of the previous year (Figure 10). All
16 months. In Australia, wetter than normal conditions
dairy product categories except for infant formula showed an
through winter have negatively impacted pasture growth.
increase in export revenue in the September quarter.
Australian milk production fell by 3 percent in September
while season-to-date milk production in September was also In terms of volumes, whole milk powder export volumes fell
down by around 3 percent. Milk production in the EU has 5 percent in the September 2021 quarter compared with the
slowed down as well with EU-27 milk production dropping September 2020 quarter while butter and anhydrous milk fat
by 0.6 percent in July. volumes fell 9 percent. Increased export volumes of protein
products, specifically skim milk powder and casein, suggests
more milk supply is being diverted to these products. This
shift of processing to proteins could be creating a further
supply constraint for key dairy commodities.
Figure 8: New Zealand milksolids production forecast to decline slightly in 2021/22 season
Year to 31 May, million kgMS
5-year average
2020/21 season
2021/22 season
to date
2021/22 season forecast
Source: Stats NZ. Source: DairyNZ and MPI.
34 35
Figure 9: Global Dairy Trade auction prices (all products) higher in 2021/22 season Figure 10: Dairy export revenues increase in September quarter of 2021
Year to 31 May Change in export revenues, September quarter 2020 vs September quarter 2021
2020/21 season
2021/22 season
to November
Season average price
Source: Global Dairy Trade and MPI.

Infant formula continues to face challenges associated with

supply-chain disruptions and strong domestic competition
in vital export market China. In the September 2021 quarter,
infant formula exports were down 12 percent in volume and Figure 11: Record high farmgate milk price forecast for 2021/22 season
28 percent in value. The challenges that infant formula is Year to 31 May, NZ$ per kgMS
facing are likely to remain for the short to medium term, and
export revenues are forecast to decline in the year to 30 June
2022 (Table 3).
Overall, total dairy export volumes are likely to decrease

in 2021/22 due to declining milk supply. However, export
revenues are forecast to increase by 10 percent and reach a
record high level of $20.9 billion in the year to 30 June 2022.
For the year to 30 June 2023, export revenues are estimated
to decrease by 3 percent compared with the 2021/22 forecast
and reach $ 20.3 billion. This is due to a flattening of milk
production and a reduction in global dairy prices.
Record high farmgate milk price likely

this season
Strong global dairy prices are expected to result in a high
farmgate milk price and good dairy farm profitability this
Source: DairyNZ and MPI.
season. New Zealand’s all-company average milksolids
payout for the 2021/22 season is forecast to increase to
$8.50 per kilogram of milksolids (Figure 11). This would be
the highest farmgate milk price on record. The timing of
this payout is significant due to the challenges that dairy
farmers are facing. These include regulatory compliance,
increasing input costs (especially feed and fertiliser costs)
and constraints around labour availability. The payout would
also enable farmers to pay down debt and make investments
needed for meeting regulatory compliance obligations. This
forecast assumes that there will be no further negative
shocks to global dairy markets. This includes the continued
impact on global markets from COVID-19, greater supply-
chain disruptions, growing inflation pressures, volatility in
exchange rates, New Zealand weather conditions and the
potential impact of any geopolitical issues.
36 37
Meat and wool

Meat and wool export revenue is forecast to increase 6 percent to reach
$11.1 billion in the year to 30 June 2022. Growth in export prices is being driven
by a global protein shortage, partial recovery from COVID-19 lockdowns, improving
consumer confidence, changes in consumer demand and rising incomes. The presence
of African swine fever (ASF) in China and reduced beef exports from Brazil, Argentina
and Australia are providing support for international meat prices. Global freight
issues and reduced restaurant activity are limiting meat export returns.
Table 4: Meat and wool export revenue 2017–23

Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Beef and veal 2,706 2,943 3,324 3,811 3,587 3,960 3,770
Lamb 2,441 3,018 3,227 3,331 3,167 3,280 3,290
Mutton 417 575 576 643 698 680 670
Wool 522 543 549 432 396 410 440
Venison 162 196 186 152 150 160 170
Other meat* 513 543 610 593 628 680 690
Hides and skins 416 396 354 241 201 210 210
Animal by-products 587 700 729 803 822 870 900
Animal fats and oils 156 147 115 140 181 200 210
Animal products for feed 273 332 376 430 452 500 550
Carpets and other wool 163 148 130 102 108 100 90
products
Year-on-year % change –9% 14% 7% 5% -3% 6% 0%
* Includes edible offal, processed meat and poultry.

38 39
Top export markets Asia remains the primary growth region for lower than usual due to prolonged drought. Meat & Livestock
global protein demand Australia has forecast lamb exports to increase 12 percent in
Year to 30 June 2021, NZ$ million and percent 2021/22 followed by a further 7 percent increase in 2022/23.
Asia’s demand for imported meat was increasing even prior Increased global exports will apply some downward pressure
to the ASF outbreak, which caused a severe and prolonged on New Zealand’s sheep meat export returns.
protein shortage and has further accelerated Asia’s demand
for protein, especially meat. This increased demand will
continue to support global meat prices over the next year
and beyond. Higher meat consumption in China (Figure 12) Outlook remains strong despite challenges
is also being buoyed by migration to urban areas, rising
incomes and a focus on health foods (including red meat). Widespread freight issues and reduced global restaurant
COVID-19 outbreaks and lower economic growth in China activity are expected to dampen growth in meat export
present downside risk. In 2020/21, China imported prices. The pandemic continues to impact the cost and
53 percent of New Zealand’s lamb exports, 84 percent of our reliability of freight, which is eroding export returns. The
mutton exports and 39 percent of our beef exports. pandemic is also affecting the type of meat demanded by
consumers, for example, cuts favourable to home cooking
and meats perceived to be beneficial to health. Although
overseas government-mandated lockdowns are less common
Constrained meat supply lifting prices than this time last year, food service activity remains low,
reflecting ongoing restrictions and some uneasiness about
Constrained global meat supplies are helping to lift export returning to dining out.
prices and overall revenue (Figure 13). In addition to pork
shortages caused by ASF, global beef supply issues are
exacerbating the global protein deficit. Beef supplies in
New Zealand’s key export markets are low due to reduced
exports from major beef suppliers. Brazil, China’s largest Beef and lamb export revenues strong
beef supplier in 2020/21, has reduced beef exports in key
markets due to the presence of atypical bovine spongiform Beef and lamb export prices remain strong due to
encephalopathy (mad cow disease). Beef exports from constrained global beef supplies, improved consumer
Argentina, China’s second-largest beef supplier in 2020/21, confidence, restaurants reopening, ASF outbreaks in China
have also declined due to its self-imposed export restrictions reducing domestic protein production and Asia’s growing
to control inflation. Australia’s beef supply is also tight due appetite for beef and lamb. As a result, the value of beef and
to farmers retaining cattle to rebuild herds. US beef exports veal exports is forecast to increase to $4.0 billion for the year
may also fall due to inflated feed prices (although this would to 30 June 2022, a 10 percent increase from the previous
initially increase supply as herd sizes are reduced). year. Prices have improved from last year (Figure 14), and
volumes have remained elevated at the beginning of 2021/22.
Global sheep meat exports are forecast to increase. In recent Beef and veal export prices in the year to 30 June 2022 are
years, Australia’s presence in the sheep meat trade has been forecast to be 6 percent higher than the previous year.
Figure 12: Proportion of meat and wool exports to China continues to grow in 2020/21
Year to 30 June, NZ$ billion
China
Other
* Includes animal by-products, fats, oils, products for feed, carpets, other wool products, hides, leather and dressed skins.
Source: Stats NZ. Source: Stats NZ.
40 41
Figure 13: Meat and edible offal export revenue starts off strongly Figure 14: Key meat export prices performing well in September 2021 quarter
Provisional cumulative daily export revenue, NZ$ billion Monthly export prices, in NZ$ per kg
Lamb
2021 Beef and veal
2019 Mutton
2020 Other meat
2018
Source: Stats NZ. Source: Stats NZ.
The forecast increase in beef and veal revenue is also Wool prices start to rise
supported by a 5 percent increase in volumes. The elevated
number of cattle being processed is being driven by higher Wool export revenue is forecast to increase to $410 million Figure 15: Sheep and beef farm profitability forecast to improve in 2021/22
livestock numbers and a wave of prime cattle being ready in 2021/22, up 4 percent from the previous year. The Year to 30 June, NZ$ per farm
for slaughter. This has increased the forecast beef and veal COVID-19 pandemic subdued demand for wool, which was
export volume for the year to 30 June 2022. We expect a already struggling to achieve sustainable prices prior to the
correction in export volumes the following year as slaughter pandemic. As overseas restrictions have eased and consumer
volumes settle. demand has begun to recover, prices have started to rise.
Freight delays are reducing demand for wool and impacting
Lamb export revenue is forecast to increase 4 percent to prices received by exporters. New Zealand inventories
$3.3 billion, and mutton revenue is forecast to decrease continue to be higher than normal due to lower demand and
3 percent to $675 million in 2021/22. Prices are forecast to prices. Farmgate wool prices are forecast to improve from a
lift by 8 percent for lamb and 6.9 percent for mutton. China very low base over the next year as economies continue
imports more than half of New Zealand’s lamb and mutton to recover.
exports by volume. Lamb export volumes are expected
to fall by 4 percent to 300,000 tonnes, driven by lower
production. Mutton export volumes are forecast to fall by
10 percent following an elevated adult sheep slaughter and Farm profitability forecast to improve
higher exports in the previous year due to high prices, dry
Sheep and beef schedule prices are forecast to increase in
conditions and conversions to other land uses.
2021/22, resulting in higher on-farm profitability. Beef +
In the year to 30 June 2021, sheep numbers are estimated Lamb New Zealand forecasts farm profit before tax (under
to have declined 1 percent driven by good mutton prices, its NZD/USD 0.75 exchange rate scenario) to be $143,500
land use change and adverse weather. In the following per farm in 2021/22, 9 percent higher than the previous
p: provisional, e: estimate, f: forecast.
year (2021/22), breeding ewe numbers are forecast to year (Figure 15). Farm expenditure is expected to increase
Source: B+LNZ.
decline slightly in line with the long-term trend of gradually 3 percent in response to rising farm input prices.
declining sheep numbers. A slightly higher lamb crop in
2021/22 (spring 2021) is expected due to increased ewe and
hogget lambing percentages. Lambing percentages have
improved, which will help maintain lamb export volumes
given the declining breeding flock.
New Zealand’s beef herd is expected to have increased by

2 percent to 3.9 billion as at 30 June 2021, which has led to
2021/22 exports to be forecast to increase. In 2022/23, lower
livestock numbers and ensuing export volumes are forecast
to lead to a slight decline in overall meat and wool revenue
of less than 1 percent.
42 43
Forestry
Forestry export revenue is forecast to increase 3 percent to $6.7 billion for the
year to 30 June 2022. Growth in the Chinese construction industry and the US
housing market are showing signs of a slowdown, reducing log demand this year.
The Chinese and US Governments' targeted measures to boost their economies and
infrastructure development are projected to support demand for our major forestry
products in the medium-term. In addition, domestic timber demand is expected to
remain strong due to robust housing demand.
Table 5: Forestry export revenue 2017–23

Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Logs 2,687 3,337 3,806 2,877 3,854 3,810 3,920
Sawn timber and sleepers 830 890 936 809 910 1,010 1,000
Pulp 651 828 812 646 663 760 750
Paper and paperboard 488 491 491 492 438 430 410
Panels 476 501 514 438 389 400 440
Woodchips 59 56 67 56 61 60 70
Other forestry products* 290 281 257 222 215 250 260
Year-on-year % change 7% 16% 8% –20% 18% 3% 2%
* Includes structural or moulded wood, furniture and prefabricated buildings.

44 45
Top export markets Residential construction investment in the US is likely to

cool. However, the medium-term demand for sawn timber
construction sector. Despite near-term challenges in the
construction sector, medium-term demand for logs is
Year to 30 June 2021, NZ$ million and percent is expected to rise driven by a rebound in non-residential projected to lift driven by the Chinese Government’s targeted
building, which is underpinned by a fiscal infrastructure measures to support the economy and infrastructure
spending spree. development.
In China, slowing credit growth is expected to weigh on the Global demand and supply dynamics create uncertainty
construction output, particularly the housing construction for log prices in the medium-term. Log prices have fallen
sector. The property market is the single-largest driver of as demand eased, due to pressures in China’s real estate
China’s economy. The slowdown in property market lending sector and general slowing of the economy. Increased supply
growth negatively impacts short-term construction activity of spruce logs from Europe is expected to put additional
and demand for logs. The downturn in the property market is downward pressure on New Zealand log prices.
forecast to be offset by increased infrastructure investment
by the Chinese Government. This will likely boost Chinese Log supply from South America into China is expected to
construction activity and, as a result, demand for logs in the be subdued because of high freight costs. This will partly
medium-term. offset the downward pressure on log demand and prices. In
the medium-term, demand and prices are also likely to be
In New Zealand, rising interest rates and stricter loan-to- supported by the imminent removal of Russian logs from the
value ratio regulations are projected to dampen domestic export market in 2022.
demand for wood products.
Supply volumes to South Korea as a share of total exports
Harvest volumes for the year to 30 June 2021 reached an have decreased from 58 percent in 2005 to 8 percent in the
all-time high of 37.6 million cubic metres, up 18 percent year to 30 June 2021. Demand in this market is likely to
compared with last year due to robust demand and high remain sluggish in the medium-term as other markets ramp
prices (Figure 16). We are forecasting harvest volumes to up supply. Demand from India has plummeted. It accounted
slightly reduce for the coming year as demand eases. for only 2 percent of total log export volumes in the year to
30 June 2021, down from 12 percent in 2011. While demand
is forecast to improve slightly over the medium-term as
India’s economy recovers, greater supply from Australia and
The outlook for logs is now challenging
Uruguay is expected to pick up much of the slack.
Log export revenue was up 34 percent during the year to 30
June 2021 due to stronger than expected demand from China.
China remains the key market for New Zealand log exports,
making up 85 percent of overall log export values
(Figure 17).
Log export revenue is forecast to reduce by 1 percent to

$3.8 billion in the year to 30 June 2022. Chinese demand
for logs has softened due to a slowdown in the construction
sector and high market prices. The effects of China’s
response to a heated property market and high levels of
debt at the country’s second-largest property developer
(Evergrande Group) have started to ripple through the
Figure 16: Log export volumes and prices reached all-time high
Export volume in thousand cubic metres and export prices in NZ$ per cubic metre
Log export volume
Average export prices
Source: Stats NZ. Source: Stats NZ and MPI.
46 47
Figure 17: Log export revenue rebounds and forecast to moderate Figure 18: Sawn timber export volumes decline despite rising production
Year to 30 June, NZ$ million Year to 30 June, thousand cubic metres
Production
Others
Domestic
Hong Kong
Export
India
South Korea
China
Source: Stats NZ and MPI. Source: Stats NZ and MPI.
Sawn timber export outlook remains strong Paper and paperboard outlook
despite increased domestic demand remains pessimistic Figure 19: Pulp export volumes stable despite slowing production
Year to 30 June, thousand tonnes
Sawn timber export values were up 13 percent in the year to Paper and paperboard export revenue was down 11 percent
30 June 2021 compared with last year supported by both in the year to 30 June 2021, despite stable export prices.
strong domestic production and rising export prices. Sawn Export volumes dropped mostly due to declining demand
timber export values are forecast to reach $1.0 billion in the as digital media replaces traditional paper products. Production
year to 30 June 2022, up a further 11 percent from 2021. Paperboard demand remains strong owing to rising demand
for consumer-packaged goods. While the outlook for prices is
Demand in the US and Australia is driven by housing expected to remain relatively unchanged, the value of paper
Export
construction activity, while it remains subdued in China. and paperboard exports is expected to reach $430 million in
Chinese demand for sawn timber has been negatively 2022, down 2 percent from the previous year. This decrease
impacted by rising export prices. The proposed Russian ban is mostly driven by reduced paper production as well as
on log exports is likely to increase the supply of timber into increased domestic demand for paperboard.
Domestic
China as Russia processes more wood for export. As China
accounts for only 12 percent of sawn timber exports by
value, the medium-term effect is likely to be marginal.
Panel outlook improves but
In New Zealand, domestic demand for sawn timber has challenges persist
increased due to strong residential construction. High freight
Panel export revenue was down 11 percent in the year
cost has contributed in putting some downward pressure on
to 30 June 2021 largely due to declining prices and
sawn timber exports despite strong export demand
sluggish demand from Australia and Japan. The Japanese
(Figure 18).
construction industry is struggling, dragged down by a Source: Stats NZ and MPI.
slowing residential building sector. Demand from Australia

has decreased significantly over the past few years, and it
Pulp prospects look more upbeat is expected to remain subdued in the medium-term. Export
Pulp production is relatively weak, but export volumes have revenue is forecast to lift by 3 percent to $400 million in the
remained stable due to slowing domestic demand (Figure year to 30 June 2022 on the back of increased construction
19). International demand for pulp remains strong thanks activity in Japan and the Japanese Government’s efforts
to robust demand for paper packaging materials, tissue to revitalise the economy by focusing on infrastructure
and hygiene products. As a result, pulp export revenue is development.
expected to reach $760 million in the year to 30 June 2022,
15 percent higher than the year prior. Demand for pulp
is expected to remain strong in the medium-term due to
continued demand for paper hygiene products. This won’t
necessarily lead to increased prices as we are expecting
increased supply from South America.
48 49
Horticulture
Horticulture export revenue is forecast to rise nearly 5 percent to $6.9 billion for the
year to 30 June 2022. Increased production for kiwifruit and apples is expected over
the period. However, lower prices due to very large avocado crops in New Zealand
and Australia, and a reduced grape harvest in 2021 will decrease export revenue
for these sectors. Consumer demand for fresh fruit and wine has remained strong
despite COVID-19 related disruptions, and this is expected to continue. Growers
and exporters continue to adjust their operations around the challenges presented
by the seasonal labour supply shortages, logistics constraints and higher costs of
shipping and production.
Table 6: Horticulture export revenue 2017–23

Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Kiwifruit 1,664 1,861 2,302 2,534 2,705 2,930 3,000
Wine 1,661 1,694 1,807 1,909 1,858 1,840 1,910
Apples and pears 701 745 839 885 831 970 1,010
Fresh* and processed** 614 622 696 721 634 680 690
vegetables
Other horticulture 525 471 489 506 554 480 530

products***
Year-on-year % change 3% 4% 14% 7% 0% 5% 4%
* Includes onions, squash, capsicum, potatoes and other fresh vegetables.

** Includes frozen vegetables (including frozen potatoes, peas, sweetcorn, etc.), dried vegetables, dry legumes, prepared and/or preserved vegetables and vegetable juices.
*** Includes other fresh fruits (including avocados, cherries, blueberries, etc.) frozen and processed fruits, fruit juices, nuts and ornamentals.
50 51
Top export markets Apples and pears Growers respond to COVID-19 induced disruptions
Year to 30 June 2021, NZ$ million and percent 2021 export season better than expected Preliminary industry data indicates a much smaller annual
increase in the planted area in apples and pears for the
The 2021 apple and pear export season is near completion crop due for harvest in 2022 compared with previous years.
with export volumes and prices performing better than Growers are responding to ongoing labour shortages,
mid-season forecasts. Exports are expected to reach around shipping disruptions and rising costs by removing poorer-
360,000 tonnes (20 million cartons) and $831 million for the performing orchard blocks and varieties and investing in
year to 31 December 2021. The reduction in export volumes labour-saving equipment where possible. New orchard
for the 2021 crop (down by 10 percent on the prior year) plantings are in 2D trellis growing systems that are more
was caused by a significant hail event in the Nelson-Tasman suited to labour-saving technologies and potential robotics.
region in December 2020, smaller average fruit size for some The industry estimates that 2D systems account for around
varieties and labour supply challenges. 15 percent of the current total apple and pear planted area.
Market demand from Asia has been strong with increased There is potential for the 2022 apple and pear crop to
export volumes to Vietnam, Taiwan, India and Japan. India reach 600,000–625,000 tonnes (up 7–12 percent), despite
provided export market opportunities for apples from the the removal of some mature orchards, due to young trees
Nelson region with cosmetic hail damage. Less fruit was maturing, higher planting densities on new orchards and
exported to Europe in 2021 due mainly to lower production assuming average climatic conditions. The industry continues
of Braeburn, Royal Gala and Jazz™ apples from hail damage to work hard to find labour to assist with harvesting this
(Figure 20). A combination of a smaller export crop overall, projected increase in the pipfruit crop. This is due to
good market demand and a greater proportion of premium current low unemployment rates and reduced numbers of
apple varieties such as Envy™, Dazzle™, Rockit™ and Pacific seasonal workers.
Queen™ resulted in higher export prices (in New Zealand
dollar terms) for most varieties. The average NZD export price for New Zealand apples and
pears for the year to 31 December 2022 is expected to be
similar to last season, influenced by an increasing proportion
of premium apple varieties in the export mix; the estimated
2021 European apple crop being similar to the three-year
average of 2018–20, although some varieties such as Cripps
Pink/Pink Lady® are expected to be significantly lower, which
should help maintain demand for southern hemisphere fruit
overall; the pre-harvest estimate for the 2021 US apple crop
being down by up to 9 percent on the five-year average, and
a slightly stronger NZD compared with the 2021
export season.
Figure 20: Production of apple varieties for European markets impacted by hail
Year to 31 December, tonnes
Pears
Royal Gala
RockitTM
Pacific QueenTM
Other apples
JazzTM
Fuji
EnvyTM
DazzleTM
Cripps Pink/Pink Lady R
Braeburn
52 53
Kiwifruit Continued growth is expected for New Zealand kiwifruit

Figure 22: Growth in gold in the three major markets, EU remains the major market for green
exports as the product range is well placed in markets
Green and gold kiwifruit export volumes and prices, year to 31 March 2011–21
Kiwifruit exports increased by 6 percent to $2.7 billion and has benefited during the COVID-19 pandemic from
in the year to 30 June 2021, increasing its share of total consumer preference for healthy foods and availability in
fruit and vegetable export earnings to 57 percent. Export supermarkets. Continued investment in infrastructure such China Volume EU (excl. UK) Volume Japan Volume
revenue for the year to 30 June 2022, which includes part as the $20 million Seeka cool store near Te Puke indicates
of the coming season starting in March 2022, is forecast to ongoing confidence in the industry. Exports of green kiwifruit China price EU (excl. UK) price Japan price
reach $2.9 billion assuming average growing conditions over are stable in the main three markets with the EU taking
summer. This increase of 8 percent from the previous year is roughly half of export volumes (Figure 22). Japan and the
driven by greater volumes of gold kiwifruit (Figure 21). EU have shown sustained price growth for gold kiwifruit as
export volumes increase.
Kiwifruit export production is estimated at 184 million trays
for the current 2021/22 season, up 13 percent on the prior
year. This includes an expected 15 percent increase in gold
kiwifruit volumes and a rise in green kiwifruit production
of 11 percent. With decreasing green producing area due
to conversion to gold, this increased volume is notable and
represents the second-highest green yields per hectare on
record after the 2016/17 season.
Commercial quantities of Red19 kiwifruit marketed under

the new RubyRed TM name are expected to come online
in the 2022/23 season and will begin to contribute more
significantly to export earnings as production increases.
The area of this variety is set to rise with 350 hectares to be
licensed in 2022 and up to 500 hectares signalled for the year
after. Yield expectations are still to be established for this Green Gold
new variety, but it is expected to command a price premium
in expanding markets for kiwifruit as a new entrant with an
attractive flavour and colour.
New licence releases of conventionally grown Gold3 have

been halved to 350 hectares next year (2022), and no organic
licence will be released. With the recent rapid increase
in Gold3 production, supply volumes are being managed
to ensure returns to growers are maintained and growth
matches demand. COVID-19 has presented a challenging
environment as in the rest of the horticulture sector with
uncertainty around logistics and supply of seasonal staff.
Figure 21: Continued export growth from gold kiwifruit

Green and gold revenue and price, year to 30 June 2012–23 Green Gold
Gold revenue
Gold price
Green revenue
Green price
54 55
Figure 23: Wine production and export volume 2005–23 Wine As a result of the lower harvest volumes this year, wine
export volumes are expected to fall 9 percent in the year to
Year to 30 June, million litres
Despite strong export trends in recent months, wine export 30 June 2022. This lower volume is expected to be nearly
revenue is expected to fall 1 percent from the previous year. offset by prices rising 8 percent in the current season. This
A poor harvest in autumn 2021 is the main driver for lower is due to higher prices across all wine types ranging from 4
volumes, but this is expected to be offset by higher prices to 7 percent and to a shift towards bottled wine, which has a
as the market adjusts to the lower volumes. As with other higher export value than an equivalent wine shipped in bulk
Wine production (previous sectors, the COVID-19 pandemic is contributing to a tight
harvest) format.
labour market and supply-chain challenges.
The percentage of wine exported in bulk format has
Wine export volume Following the large 457,000 tonne harvest in 2020, production increased steadily since 2008, reaching 45 percent in the
volumes fell 19 percent to 370,000 tonnes in 2021 year to 30 June 2021. This has been part of a global trend for
(Figure 23). Frosts in September and October were followed wine to be bottled closer to the point of sale rather than the
by low temperatures during flowering in Marlborough and point of manufacture where possible.
some of the other South Island wine regions. Marlborough
accounts for 78 percent of production and 88 percent of This year, only 41 percent of exports are expected to be
exports in a typical year, so the weather conditions there are shipped in bulk format (by volume). The significantly smaller
a significant factor for the sector. crop is the main driver, but there are also indications that a
shortage of bulk shipping containers and capacity constraints
The tight labour market, driven in part by border restrictions, in destination markets are driving a partial reversal from the
didn’t appear to have a significant impact on the 2021 previous trend. However, the trend favouring bulk exports is
harvest, but the winter pruning campaign was constrained. likely to resume over the medium-term.
This could limit the yield potential of vines that weren’t
pruned adequately in the coming harvests.
Source: New Zealand Winegrowers and MPI
Table 7: Wine production and trade 2017–23

Year to 30 June
Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Area harvested 36,943 38,073 39,061 39,935 40,320 41,000 41,700

(hectares)
Grape production 396,000 419,000 413,000 457,000 370,000 451,000 459,000

(tonnes)
Wine production 285 302 297 329 265 325 330
(million litres)
Export volume 252 254 269 285 284 258 290

(million litres)
Export price 6.59 6.67 6.72 6.70 6.55 7.10 6.60

(NZ$/litre)
Export value 1,661 1,694 1,807 1,909 1,860 1,840 1,910

(NZ$ million)
Source: MPI, New Zealand Winegrowers and Stats NZ.
56 57
Other horticulture market windows. These disruptions along with higher

Figure 24: Strong quarterly avocado exports to most Asian markets in September 2021
shipping costs contributed to a lower average NZD export
Export volume in trays, September quarter 2019–21
The coming avocado season is looking challenging with price for the season.
oversupply and falling prices
Similar to last year, vegetable growers have had to take
For the year to 30 June 2021, avocado export revenue several COVID-19 related factors into account for their
reached a record high of $202 million. This record export spring 2021 planting programmes, including interrupted and 2019 Q3
revenue was mostly driven by a strong production season reduced demand from the domestic hospitality and tourism
along with robust export prices, which reached NZ$6.96 sectors and seasonal labour concerns. Growers of export
per kg. New Zealand avocado exports revenue was also crops are anticipating ongoing disruptions and high costs
boosted by higher export volumes to Australia, which faced for shipping with onion growers reducing the overall planted 2020 Q3
an avocado shortage in 2020. This avocado season was the area for the 2021/22 season by around 4 percent.
fourth consecutive year of strong production volumes.
The anticipated steady recovery in export volumes is reliant
Avocado growing conditions have been favourable for the 2021 Q3
on the hospitality sector being less impacted by COVID-19
coming season in New Zealand resulting in large volumes of and fewer shipping constraints. In addition, onion growers
fruit. Coupled with weaker than usual export demand, mainly will be seeking improved market access prior to any
from Australia, this has pushed down prices and returns for significant increase in plantings.
avocado growers.
The upcoming season is looking challenging for New Zealand Cherries and other fresh fruits are looking
avocado exporters with a congested Australian marketplace. relatively promising
The country, which has benefited from excellent growing
conditions, is experiencing an oversupply of avocado while Summer fruit growers in the main growing regions of
months of lockdown have hampered sales to restaurants and Hawke’s Bay and Otago are hopeful of a better season in Source: Stats NZ and MPI.
cafés, pushing down prices. New Zealand avocado export 2021/22.
revenue to Australia is down 73 percent to $8.6 million in
Orchards received good winter chill, and fruit set has been
the September 2021 quarter, when compared with the same
reported as average to good. Growers in Hawke’s Bay are
period last year.
prepared for higher disease pressure than usual due to the
In the medium-term, global avocado volumes are expected to forecast warmer and more humid and wet weather conditions
rise due to increased planting in New Zealand and overseas, associated with La Niña.
which is likely to put downward pressure on prices. New
Most growers have thinned fruit early to better manage
Zealand avocado growers are also expected to face increased
labour supply constraints. Cherry growers in Hawke’s Bay
competition from South American growers, especially from
are expecting crop loads of around 80 percent of normal
Chile, in Asian markets. COVID-19 related freight delays
production. While overall yields will be down, the fruit will be
and higher shipping costs will likely continue to be another
of higher quality and size and easier to harvest.
challenge for avocado exporters.
The main cherry crop in Central Otago will be largely
On the upside, demand for avocado in Asian markets has
harvested and exported in December and January. The
picked up in the September 2021 quarter, resulting in
combination of lower yield, good size and quality products
higher export volumes compared with the same time last
should help maintain good export prices. With summer
year, especially for Taiwan, China, Singapore, Hong Kong,
holidays for university and high school students coinciding
and Malaysia (Figure 24). If this trend continues, this is an
with the main harvest period, growers and packers have
encouraging sign towards further export diversification.
several campaigns planned or under way to attract students.
Overall, under current low export prices and weaker export
Cherry export revenue is forecast increase to $68 million
demand, New Zealand avocado export revenue is estimated to
in the year to 30 June 2021 compared with $55 million the
be about $115 million for the year to 30 June 2022, which is
previous year. This rise in export revenue is expected to be
about 43 percent lower than the export revenue seen in the
mostly driven by a 20 percent increase in volume to 3 million
year to 30 June 2021, which was at a record high. Avocado
kilograms while export prices are expected to increase
export volume is forecast to be approximately
3 percent compared with last year.
4.4 million trays.
Vegetable sector challenged by COVID-19

induced disruptions
Export revenue from fresh and processed vegetables was

$634 million in the year to 30 June 2021, down 12 percent
on the previous year mainly due to lower export volumes for
processed vegetables, particularly frozen potatoes.
Onion exports from the 2021 crop exceeded pre-harvest

expectations driven by high yields and bulb quality
from favourable climatic conditions. However, shipping
disruptions meant that some consignments missed targeted
58 59
Seafood
There have been some positive demand signals as food service begins to reopen.
COVID-19 continues to impact New Zealand's seafood industry. Prices and volumes
have fluctuated throughout 2020 and 2021 due to food service closures, challenging
freight logistics and lower consumer spending. These conditions are expected to
persist, contributing to a low growth forecast over the period to 30 June 2022.
Table 8: Seafood export revenue 2017–23

Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Wild capture* 1,338 1,372 1,509 1,397 1,348 1,360 1,390
Aquaculture 406 406 454 459 425 440 450
Year-on-year % change –1% 2% 10% –5% –4% 2% 2%
* Includes deepwater, freshwater, inshore finfish, inshore shellfish, other fish products, and pelagics.
60 61
Top export markets Exports are forecast to rise 2 percent to $1.8 billion for the
year to 30 June 2022, driven by continued economic recovery
Year to 30 June 2021, NZ$ million and percent in our major markets and increasing demand, notably in
the restaurant trade. To date, the recovery has largely been
driven by increasing volumes with prices sitting around 2018
levels. We forecast continued moderate export growth in the
year to 30 June 2023, with a further 2 percent increase in
seafood export revenues.
While the initial lockdown in March 2020 had large impacts

on domestic seafood production, the most recent lockdown in
New Zealand and Auckland is expected to have little impact
on the seafood sector. Processors were able to continue
operating as an essential business, and any fisheries that
were impacted by the lockdown can delay their catch within
the same fishing year.
Aquaculture supports the sector recovery from

COVID-19
Aquaculture exports reached $425 million for the year to 30
June 2021. For the year to 30 June 2022, aquaculture exports
are expected to grow 4 percent to $440 million. Although
this growth is a positive sign, export values are expected to
remain below pre-COVID-19 levels for the next two years.
Higher frozen salmon export quantities have driven the

recovery in aquaculture export revenue. The reduction of
frozen inventories acquired during lockdowns has resulted in
a rise in export quantities of salmon. Frozen products kept in
storage were exported earlier than planned, as the price of
storage increased to uneconomical levels. Frozen products,
which are worth less than fresh ones and account for a
bigger share of exports, drove down average prices. Prices
are expected to rise as the ratio of fresh product increases in
the coming year. Alongside salmon, there are signs of price
recovery for mussel exports, which were heavily impacted by
disruption to food service markets as a result of COVID-19.
The future of the aquaculture sector is bright, with

investment under way into developing open ocean
aquaculture, allowing salmon farms to expand. This is a
key Government objective with the goal to deliver economic
growth and for the aquaculture sector to become a $3 billion
industry by as soon as 2030. This would be significant growth
in the sector as it is currently worth around $650 million
(exports and domestic sales). This growth is expected to be
primarily export focused.
Source: Stats NZ.
62 63
Falling hoki limits reduce export Rock lobster exports continue to benefit from
revenue potential Australian market absence
Hoki export revenue reached $186 million in the year to The New Zealand rock lobster industry has continued to
30 September 2021, a 9 percent increase from the year prior. benefit from Australia being unable to get market access
This was mostly driven by a 20 percent increase in the to China for rock lobster. Australia lost access to China for
quantity exported. Hoki exports revenue sits well below rock lobster exports in December 2020, due to rising trade
pre-COVID-19 levels. Prices have also been weaker than the tensions between the two countries. Figure 25 illustrates the
previous two years, sitting around 2018 levels. impact of this policy on New Zealand.
MPI reviews catch limits for selected stocks twice a year to Rock lobster export revenue rose 52 percent (to $362 million)
ensure that fisheries resources are used sustainably. The for the year to 30 June 2021. The gain in export revenue has
Minister for Oceans and Fisheries has made adjustments been driven by strong prices and export quantities. Due to
to the catch limits as part of the recent October 2021 disruptions from COVID-19 in March 2020, some of the TACC
sustainability round. The most significant modification to was brought forward to the 2021 fishing year. Even though
key export species is a 5,000-tonne reduction in the total a larger quantity of rock lobster was exported from New
allowable commercial catch (TACC) for hoki. This reduces the Zealand, prices remained high due to Australia’s inability to
TACC to 110,000 tonnes for the year to get to market.
30 September 2022.
For the year to 30 June 2022, rock lobster prices are
expected to remain high, but exports are expected to fall back
to the normal levels.
Figure 25: New Zealand benefits from Australia absence in rock lobster market
Tonnes and US$ price per kg
Australia
New Zealand
Price for New Zealand
Source: Global Trade Atlas.
64 65
Arable
Demand for New Zealand’s arable exports remains solid, driven by weather-related
production issues in the northern hemisphere, global low inventories and COVID-19
lockdowns leading to more home gardening. The outlook for the domestic cereal
market is positive with feed grain prices steadily increasing through 2021 and strong
demand from the dairy sector expected to hold through 2022.
Table 9: Arable export revenue 2017–23

Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Vegetable seeds 64 92 87 112 88 95 95
Ryegrass seeds 46 55 60 73 80 85 85
Clover/legume seeds 23 28 20 31 26 25 30
Other grains and seeds* 63 68 69 74 66 70 70
Export value (NZ$ million) 197 243 236 290 260 275 280
Year-on-year % change –6% 23% -3% 23% –10% 6% 2%
* Includes maize, other grains and oilseeds.

Percentages in the table are rounded to the nearest whole percent.
66 67
Top export markets Crops coping with variable season Several New Zealand companies are struggling to fill their
orders due to grower and land availability and competition
Year to 30 June 2021, NZ$ million and percent The season to date has been mixed. A dry autumn slowing from grain with the rise in prices.
the establishment of autumn-sown crops was followed by
a wetter than normal winter with minimal seed planting Export revenue for ryegrass seed rose by $7 million for
and a cool start to spring with wet soil conditions delaying the year to 30 June 2021 compared with 2020. Demand for
cultivation and planting. However, crops are reported to amenity grasses, which are in short supply internationally
have come through winter well, and drier conditions in late and not widely grown in New Zealand, flowed through to
September allowed spring planting to get well under way forage seeds. Ryegrass seed exports to the US almost
although harvest may be later. The Canterbury floods in May doubled but are expected to taper off with changes to US
2021 caused severe damage on some arable farms, but the port clearance processes increasing the cost of
majority escaped unscathed or with minor effects. imported seed.
There has been increasing demand for forage seeds from

South America where greater grain and soyabean production
Demand solid for seed exports have reduced local forage seed production. Demand for
forage seed from China continues to increase while demand
Following a record return of $290 million in 2020, arable from Europe is expected to fall back after recovering from
export revenue for the year to 30 June 2021 fell 10 percent to the drought and mice damage over the last two years.
$260 million but was 10 percent ahead of 2019 COVID-19 has created challenges in getting seed to export
(Figure 26). A fall in vegetable seed export revenue was the markets with high freight rates and a shortage of space
main contributor with lower export volumes of carrot and on ships.
radish seed with yields back on the large 2019 harvest.
Domestically, a rise in demand for forage seeds is expected
Arable export revenue for the September 2021 quarter was this season with pasture damage from the wet winter
up 10 percent compared with the same quarter a year ago. requiring substantial regrassing.
Revenue was up for all export categories with ryegrass and
vegetable seeds being the main contributors.
For the year to 30 June 2022, arable export revenue is

expected to increase 6 percent due to increased global
demand for seed and supply issues in many production
regions of the world’s major exporters.
Demand for export seed has remained strong during the

COVID-19 pandemic, particularly the multiplication crops.
Lockdowns and travel restrictions led to an increase in home
gardening, increasing demand for lawn and vegetable seed.
A heat wave and drought caused crop failures this season
in North America, and Europe had a mixed harvest with
flooding affecting some countries. This has impacted the
global supply of many seed crops and is expected to increase
demand for New Zealand seed over the next 6–18 months.
Figure 26: Arable export revenue fluctuates between years but continues to trend up
Total arable
Vegetable seeds
Ryegrass seeds
Other grains and seeds
Clover seeds
68 69
Lift in domestic cereals market The price for locally grown milling wheat is lower than it
Figure 27: Spot prices rise for domestic feed grains and PKE during 2021
was last year, and farmers have plenty of other crop or
Year to 31 December
Low domestic grain stocks, a high dairy payout and a tight livestock options. The decline in locally grown milling wheat
early spring feed supply has led to price rises in most feed has the potential for food security issues. Supplies of milling
grains (Figure 27). Feed wheat and feed barley prices have wheat are tight in global markets after issues in multiple
risen about $40 per tonne over the last six months with feed production regions of the world’s major exporters.
wheat now priced higher than milling wheat. Feed grain
prices are expected to hold with the dairy payout expected to Yields for the 2021 maize grain harvest were marginally Milling wheat
remain high and price increases in imported products such lower than the 2020 harvest, but total tonnage was
as PKE and distillers’ grains. The Australian harvest is under estimated 11 to be up 13 percent (to 214,900 tonnes) due
way, and while it will be some time before harvest quantity is to a 2,300 hectare increase in planted area. Almost all the Maize grain
confirmed, it is expected to be near record production. Tight harvest had been sold at 1 June 2021. Planting for the 2022
global wheat supplies due to reduced exports from Canada, harvest has been on track in the Waikato, but wet weather
the US and Russia mean it is unlikely to result in cheap has delayed planting in Manawatu and may lead to the use of Canterbury feed wheat
wheat for New Zealand importers. lower-yielding hybrids.
The 2022 harvest areas 10 for feed wheat and feed barley are A recent AgResearch study showed that resistance to post- Canterbury feed barley
expected to exceed the previous two years where the 2021 emergent herbicides is becoming more common for grass
harvest areas were lower than the previous year (Figure 28). weeds on wheat and barley farms. At present, there are
limited alternatives to many of the herbicides that the weeds Waikato PKE
The lack of certainty around milling wheat contracts due are evolving resistance.
to changes in the procurement process has resulted in a
23 percent (2,800 hectare) decline in the area sown for the A new Seed Certification Information System is being
developed with the first stage to be released in early 2022 for Source: NZX Grain and Feed Insight.
2022 harvest compared with 2021.
entry of 2023 harvest crops. The system will help meet the
increasing international market requirements for traceability
throughout the value chain. Figure 28: Increase in feed grain hectares for the 2022 harvest
Hectares
2020 harvest
2021 harvest
2022* harvest
* Based on sowings and sowing intentions at 10 October 2021.
Source: Foundation for Arable Research, AIMI Survey of Cereal Areas and Volumes, 10 October 2021.
10
Foundation of Arable Research, AIMI NZ Survey of Cereal Areas and Volumes, 10 October 2021.
11
Foundation of Arable Research, AIMI NZ Survey of Maize Areas and Volumes, 1 June 2021.
70 71
Processed food and other

products
Exports for this sector are expected to be nearly $3.1 billion in the year to
30 June 2022, a fall of 1 percent from the previous year. Elevated revenue from live
animal exports seen in 2020/21 is forecast to continue into 2021/22, but high carry-
over stock of honey and logistics challenges will likely put downward pressure on
other categories.
Table 10: Processed food and other products export revenue 2017–23
Actual Forecast
Product 2017 2018 2019 2020 2021 2022 2023
Innovative processed foods 664 759 788 785 645 620 690
Honey 329 348 355 425 482 460 450
Sugar and confectionery 305 263 225 250 285 280 280
products
Cereal products 285 306 306 292 282 290 290
Live animals* 274 241 239 290 513 550 430
Soup and condiments 186 184 196 198 181 190 190
Other products** 595 609 746 766 724 710 740
Year-on-year % change –3% 3% 5% 5% 4% –1% 0%
* Includes horses, cattle, poultry, goats and other animals.

** Includes beverages, vegetable-based dyes and spices.
Percentages in the table are rounded to the nearest whole percent.
72 73
Top export markets

Year to 30 June 2021, NZ$ million and percent
Source: Stats NZ.
74 75
Honey Other categories

Total honey exports hit a record 12,790 tonnes in the year Collectively, exports of products in the other categories in
to 30 June 2021 (Figure 29). However, the average price this sector (excluding honey and live animals) were down
decreased by 9 percent to $37.66 per kg compared to the 8 percent in 2021 compared with the 2020 year, mainly due
year prior (Figure 30). While most exported honey was still to an 18 percent decrease in innovative processed foods that
packed ready for retail, a greater proportion of monofloral reversed previously very strong growth. This is likely to be
mānuka and non-mānuka honeys were exported in bulk and due to logistic difficulties affecting freight worldwide.
at lower prices than the year prior. Export prices for honey in
retail packs held steady. In 2022, we are forecasting that export revenue from these
products will be stable compared with 2021, declining by just
Several years of bumper honey harvests, including a record 2 percent. Australia remains the most dominant market for
estimate of 27,000 tonnes in 2020, as well as a significant other categories taking 51 percent of all exports (by revenue)
contraction of the domestic tourism market due to COVID-19, in the year to 30 June 2021, up from 48 percent in 2020.
have contributed to high domestic stocks of honey. These A recovery of 5 percent is forecast for 2023 as freight costs
are unlikely to be cleared quickly, even with a more subdued and times normalise.
domestic honey crop estimate of 20,500 in 2021.
Honey exports are forecast to decrease slightly to

$460 million for the year to 30 June 2022. Elevated export
volumes are expected to reduce only slightly from the 2021
record supported by continued high demand for monofloral
mānuka. However, continued high honey stocks in New
Zealand are expected to subdue prices on retail honey and
incentivise exporters to clear stocks in bulk.
Figure 29: Bulk honey exports up but price down

Year to 30 June 2021, percent
Figure 30: Average prices for all honey down in 2021

Year to June 2021
Monofloral mānuka
Multifloral mānuka
Non-mānuka
Change in volume (percentage) Change in value (percentage)
Source: Stats NZ and MPI. Source: Stats NZ and MPI.
76 77
Economic Intelligence
Unit online resources:
More primary industry data can be found on the MPI website: www.mpi.govt.nz/EIU
Market insights
Reports that provide insights into consumer
preferences and purchasing behavior, as
well as in-depth research into the channels
that supply them.
Situation and Outlook for

Primary Industries
The latest update and underlying data for
our outlook on the primary industries plus
access to previous SOPI reports.
Farm monitoring
Reports accessing the annual production
and financial performance of typical farm or
orchard businesses.
Data
A range of publicly available data covering
primary industry production and trade.
78 79
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Situation and Outlook for Primary Industries – December 2021

ISBN 978-1-99-102604-0 (print)

ISBN 978-1-99-102603-3 (online)

Hon Damien O’Connor Ray Smith

Minister of Agriculture Director-General,

Food and fibre sector in

Meat and wool

Processed food and other products

Table 1: Food and ﬁbre sector export revenue 2017-23

Dairy 14,638 16,655 18,107 20,135 19,093 20,930 20,310

Forestry 5,482 6,382 6,883 5,539 6,531 6,720 6,850

Horticulture 5,165 5,392 6,134 6,555 6,582 6,900 7,150

Seafood 1,744 1,777 1,963 1,855 1,772 1,800 1,840

Arable 197 243 236 290 260 275 280

supported economic activity, allowing for a strong recovery

The Reserve Bank of New Zealand raised the official cash

initially forecast. The IMF has reviewed its forecast down

* Includes live animals, honey and processed food.

SOPI Dec 2021

SOPI Dec 2020

SOPI Jun 2021

Source: Stats NZ and MPI.

Top 10 export destinations Top export markets

Export revenue % of total Export revenue % of total

Dairy 19,093 40% Meat and wool 10,391 22%

Forestry 6,531 14% Horticulture 6,582 14%

Seafood 1,772 4% Arable 260 1%

The Māori agribusiness in numbers

$2.4B 1.4M 22,500 32%

$8.6B $4.9B $4.3B 13%

Fishing and aquaculture Other agriculture Kiwifruit growing Other

Backing the Māori primary sector The Ahuwhenua trophy

MPI is the principal provider of government

Quinn Morgan, winner of the 2021 Ahuwhenua

Ngā Pouwhiro Taimatua

Whangaparāoa MABx cluster

Table 3: Dairy export revenue 2017–23

Cheese 1,830 1,905 1,965 2,074 2,064 2,230 2,280

Infant formula 778 1,240 1,641 1,851 1,579 1,350 1,530

Year-on-year % change 10% 14% 9% 11% –5% 10% –3%

Source: Stats NZ and MPI.

Global dairy prices remain high on the back of

2021/22 season forecast

Source: Stats NZ. Source: DairyNZ and MPI.

Season average price

Source: Global Dairy Trade and MPI.

Infant formula continues to face challenges associated with

Overall, total dairy export volumes are likely to decrease

Record high farmgate milk price likely

Meat and wool

Table 4: Meat and wool export revenue 2017–23

Lamb 2,441 3,018 3,227 3,331 3,167 3,280 3,290

Mutton 417 575 576 643 698 680 670

Wool 522 543 549 432 396 410 440

Venison 162 196 186 152 150 160 170

Other meat* 513 543 610 593 628 680 690

Animal by-products 587 700 729 803 822 870 900

Year-on-year % change –9% 14% 7% 5% -3% 6% 0%

* Includes edible offal, processed meat and poultry.

Source: Stats NZ and MPI.

2021 Beef and veal

2020 Other meat