The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Vanessa Williams
Published on

Growth mindset

Primary producers are benefiting from high in-market prices for export goods, which are being fed back to producers through elevated returns at the farm or orchard gate level.

Screenshot 2019-05-20 12Industry confidence varies between sectors with high debt levels in the dairy sector weighing on sentiment.

Milk prices are trending up but the dairy industry remains cautious. Dairy farmers are focusing on ensuring their farming operations meet regulatory and consumer expectations, as well as focusing on debt reduction.

Meanwhile, optimism is starting to creep back into the sheep and beef sector. Lamb returns have held at exceptionally high levels throughout the season, while those for beef have been steady. Beef returns have benefited from the emergence of China as a strong alternative market, reducing the industry’s reliance on the United States.

Horticultural markets remain robust.

A record harvest of apples and kiwifruit is expected. However, wine growers are not having such a great season, with indications to date that yields are well below expectations.

While commodity returns are generally strong at present, this is occurring against a backdrop of slowing global economic activity. This poses a key risk for our agriculture and horticulture sectors due to our very high exposure to export markets.

The wellbeing of China’s economy, in particular, is a key risk given that market directly accounts for 24% of our exports. We also have further indirect exposure to this market as many of our other export partners, such as Australia, are also highly exposed to China. But for now demand from China is showing no signs of letting up.

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Topics: agriculture China economy exports