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Updated forecast for primary production published

Analysis published today shows farmers and growers have been hit hard by two significant climatic events, Agriculture Minister Jim Sutton said today.

The Situation and Outlook for New Zealand Agriculture and Forestry, updated as part of the Budget process, says that for the year ending June 2003, there have been a widespread cold-wet/cold-dry spring and a serious summer/autumn drought in some regions.

In October and November average temperatures dropped 1.2 degrees and 0.7 degrees, respectively, from the average of the last 30 years. Pasture growth was adversely impacted just when feed demand was rising. Fruit crops also suffered significant hail and frost damage from two separate events in October 2002. As a consequence, export volumes are estimated to be down 6% for apples and 8% for kiwifruit, and the grape harvest fell by 50%.

Mr Sutton said New Zealand had been in an El Nino climatic situation, but one with western North Island regions from Taranaki to Wellington experiencing severe drought conditions. Historical records show a similar occurrence in the year ended June 1970.

The lower North Island drought has had a significant impact on national milksolids production. Average slaughter weights per head were down on last year for adult cattle in February and March 2002, for adult sheep in March and April, and for lambs in March.

There will be some carry over impacts to next season. Lamb births are expected to be down. Given the current conditions of female breeding livestock in drought areas, a warmer than average winter will be a critical factor in defining next season's production potential.

Mr Sutton said the SONZAF update had some good news for farmers, predicting that international prices would recover over the next few years, and the New Zealand dollar could fall again after possibly peaking about March next year.

Key findings from the SONZAF include:

Pastoral exports: For the year ended March 2003, the provisional free-on-board (FOB) value of pastoral exports was down 13% to $12.2 billion largely due to a 34% fall in dairy prices. By year ending March 2008, export value is projected at $13.3 billion due to recovery in dairy prices and increasing volumes.

Horticultural exports: For the year ending March 2003, the provisional FOB value of horticultural exports was down 1.1% to $2.09 billion, due mainly as rising wine export volume moderated export value falls for most other products. By year ending March 2008, horticultural export value is projected at $2.83 billion, due to rising wine volumes and kiwifruit prices.

Forestry exports: For the year ended March 2003, the provisional FOB value of forestry exports rose 1.7% to $3.71 billion, due to rising volumes moderated by falling prices. By year ending March 2008, export value is projected at $4.58 billion, mainly due to rising export volumes.

MAF Policy provided forecasts and projections for major pastoral, horticultural and forestry export products to the Treasury on 28 March 2003 as input into their Budget Economic and Fiscal Update. The outlook period is out to 2008. Some adjustments have been made to the original forecasts including provisional export data and production data for March quarter 2003.

The full report can be found on MAF's website:

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