Just Released: "New Zealand Agribusiness Report Q1 2014"

We believe that increased access to international markets, particularly Taiwan and China, will prove to be the prime growth driver for the agribusiness sector in New Zealand over the medium to long term. This will be supportive for both the dairy and the livestock segments. However, we also warn that vulnerability to weather conditions, lack of skilled labour, tightening regulations and the consequent increase in operating costs could put a dent on growth prospects.

Key Trends

* Milk production growth to 2016/17: 6.0% to 21.8mn tonnes. Given the small domestic consumption base and the high productivity of the sector, long-term expansion will mainly come from export opportunities, particularly to Asia and the Middle East, which are forecast to enjoy significant dairy consumption growth to 2016/17.
* Milk powder production growth to 2016/17: 14.8% to 1.5mn tonnes. Across all the dairy segments, export opportunities (particularly to China) will be the main growth drivers over the medium term.
* Beef production growth to 2016/17: 6.3% to 663,000 tonnes. The dairy sector will continue to limit the amount of cattle available for slaughter.
* BMI universe agribusiness market value: US$10.5bn in 2014 (up slightly from the expected 10.4bn in 2013; forecast to grow annually by 2.4% on average to 2017)
* 2014 real GDP growth: 2.0% (down from 2.2% expected in 2013; forecast to average 2.4% from 2014 until 2017).
* 2014 consumer price inflation: 2.2% (up from 1.4% in 2013; forecast to average 2.4% from 2014 until 2017).

Full Report Details at
- http://www.fastmr.com/prod/754612_new_zealand_agribusiness_report_q1_2014.aspx?afid=303

Key Developments

New Zealand, along with Australia, is poised to benefit significantly from the exponential growth in China's beef imports in recent years, jumping almost eight-fold in five years, from 23,000 tonnes in 2009 to an expected 175,000 tonnes in 2013. Although beef represents only 8% of China's total meat demand, the low potential production growth and rising demand provides opportunities for exporting countries. In 2011, New Zealand exported 24,924 live cattle valued at NZD63.2mn to Chinese farms; this rose to 38,232 head valued at NZD100.7mn in 2012. There was further good news for New Zealand's livestock segment in May 2013, when Chinese authorities cleared certificates for New Zealand meat, making way for the segment's access to the Chinese market.

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