Long-term gains for New Zealand agriculture as sector confronts difficult markets in 2009 – industry report

Action taken by New Zealand farmers to confront the challenges of the global financial crisis will strengthen the industry for the future and allow farmers to capitalise on an expected recovery in rural commodity markets from 2010, according to a recently-released industry report.

In its annual New Zealand Agriculture in Focus report, leading agribusiness lender Rabobank says many of the country’s primary producers – particularly those involved in dairy and wine – will focus on cost reductions and operating efficiencies in 2009 as they face unprecedented challenges and uncertainty in international markets and on the domestic front.

But it’s not all bad news for the agricultural sector, according to the report, with some impacts of the global financial and economic crisis working in the industry’s favour and expected to provide some buffer in the year ahead. Further, the outlook for New Zealand’s sheep and beef sector has improved significantly with tightening supply providing a much-needed boost to farm gate prices.

Action taken by producers in 2009 to control costs and improve efficiency and productivity – rather than just increase production and scale – will stand the sector in good stead to reap the rewards and prosper with economic recovery in future years, the report says. “This will present the perfect opportunity to re-establish the competitive advantages that have been the basis of New Zealand’s long-term agricultural success,” it says.

Grappling with challenges “New Zealand’s agricultural sector has entered 2009 grappling with the impact of the most turbulence ever seen in international markets and producers are undoubtedly faced with a very challenging outlook in the year ahead,” says report co-author, Rabobank senior analyst Hayley Moynihan. A dramatic drop in several agricultural commodity prices (after the boom levels of 2007/early 2008), along with reduced consumer spending and extremely tight credit availability, are three of the key factors hitting the sector hard, the report says.

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Source
Press Release: Rabobank
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