Can horticulture growth continue?

By: Mike Chapman

In June this year the Ministry for Primary Industries (MPI) released its ‘Situation and Outlook for Primary Industries’ report which has horticulture’s exports (including wine) growing by 5.3 per cent.

The report predicts thathorticulture’s exports will reach $5.3 billion for the year ending June 2017, before increasing steadily to exceed $6.3 billion by 2021. MPI believes that the continued growth will be led by existing apple production and increased plantings of gold kiwifruit and new apple varieties.

In 2015, the combined domestic supply and horticultural exports (excluding wine) was worth $5 billion. The 2016 figures were recently released, with horticulture worth $5.6 billion. There were increases in both the value of domestic supply, by $0.2 billion, and exports, by $0.4 billion. This data comes from Plant & Food Research’s ‘Fresh Facts’ annual accumulated statistics.

Outstanding performance

Fresh fruit exports in 2016 increased by an impressive 35 per cent over 2015. Outstanding performances were seen by:

  • Kiwifruit at $1.7 billion, up nearly $500 million or 42 per cent on 2015 – kiwifruit exports are now worth more than New Zealand’s wine exports ($1.55 billion);
  • Apples at close to $700 million, up $130 million or 23 per cent on 2015;
  • Blueberries rose 50 per cent on 2015 to $36.5 million; and
  • Cherries rose by 30 per cent to $68 million.

Onions dominated the fresh vegetable export sector with a sizable increase of 38 per cent, from $81 million to $112 million. Overall the vegetable export sector rose four per cent. In the vegetable export sector 60 per cent of the value is a mixture of fresh, frozen, dried, or a vegetable preparation (this area is dominated by peas, potatoes and sweet corn). Much of our vegetable sector supplies New Zealand’s domestic market with both fresh and processed product and is valued at approximately $2 billion.

Both sets of data show impressive growth. There is no indication that this growth will slow down. But this growth is dependent on exports. More than two-thirds of what we grow is exported. Therefore, any downturn in our export markets will affect future growth. It is pleasing to note that the economies of our major trading partners are also growing, which leads to increasing purchasing power for imported primary sector products.

There are risks

The risks are well-known. What will happen with United States trade when President Trump follows through with his election promises? Also, following the disastrous June election result for Theresa May in the UK, how will that affect trade between the UK and European Union (EU)? Will there be opportunities for NZ to increase its trade with either, or both the UK and EU?

The government is working on free trade deals with both the UK and EU. It also seems that the Trans Pacific Partnership (TPP) may now proceed without the US. The key advantage for horticulture there will be reduced tariffs worth over $20 million a year.

MPI’s view is that even though more uncertainty exists in global trade, compared to a year ago, a lower New Zealand dollar and rising import demand from China are positive signs in the short term.

So the answer from all accounts appears to be that horticulture’s exports will continue to grow as demand is strong in our export markets and the government’s free trade negotiations will continue to make access to these markets easier and more cost effective.

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