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Agriculture outlook hails an agricultural sunrise

(PR.co.nz) Federated Farmers is welcoming two developments marking agriculture’s economic sunrise. That being today’s release of the Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) and Heartland New Zealand making a bid for PGG Wrightson Finance.

“The latest Situation and Outlook for New Zealand Agriculture and Forestry, or SONZAF, paints an incredibly bright picture for the medium term,” says Philip York, Federated Farmers economics spokesperson.

“In a six year period, from 2010 to 2016, gross agricultural revenue is forecast to expand by some 45 percent from $22 billion to $32 billion.

“This must be a major cause for celebration for all New Zealanders because these export dollars directly pay for health, education and social services. Half of this revenue is also consumed in the provincial economy.

“I’m genuinely encouraged to see agricultural sector income, as a percentage of its gross revenue, stabilising in the 20 percent range. For the benefit of some politicians, in 2009, that figure was a mere 7.2 percent reflecting trade exposure.

“If we can keep the number of agricultural employees stable at 2010 levels, then by 2016, each agricultural employee could be generating $407,000 in gross revenue per person.

“That’s well up from $279,000 in 2010 and highlights the significant value inherent in agriculture. By way of comparison in 2010, tourism generated value of $80,000 per employee.

“We do note that SONZAF has used Treasury’s Budget forecasts for currency with the Kiwi dollar projected to fall back to historic averages by 2015.

“The risk is that the further the timescale moves out, the less reliable these forecasts become as indicators. With the slow budget deficit drawdown and the impact of fiscal policy upon monetary policy, I would take the exchange rate forecasts with a pinch of salt.

“Nor does SONZAF factor in any risks from biosecurity, climate or commodity price volatility. These are very real to farmers and a farm’s risk management profile. As is the risk of some green-eyed tall poppy syndrome, kneecapping New Zealand’s unique competitive advantage.

“That aside, Federated Farmers is highly encouraged by SONZAF and it’s no wonder why Heartland New Zealand has made a $100 million bid for PGG Wrightson’s finance unit.

It is positive to see Marac Finance, Canterbury and Southern Cross building societies appreciate the immense opportunity agribusiness offers.

“Farmers will welcome the added competition any new lender could offer assuming the bid is successful,” Mr York concluded.

Media Release on 15 June 2011 from Federated Farmers

 



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