| Market Research A to Z | Company Profiles A to Z | Register | Contact Us |
| +44 (0) 203 086 8600 Call us on |
New Zealand Agribusiness Report Q2 2010
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
New Zealand |
Published |
3 March 2010 |
Number of Pages |
53 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
At the start of 2010, New Zealand, or at least half of it, was struggling with unusually dry weather conditions. The El Nino-Southern Oscillation (ENSO) phenomenon brought months of below average rainfall to the North Island in late 2009 and early 2010. In the first quarter of 2010, the government declared Northland a medium level drought zone. This is the first time the area has been struck by an official drought in almost 30 years. We expect the dry weather to see milk production in the North Island fall as pasture conditions deteriorate. The poor pasture has also seen a spike in cattle slaughter in the area as farmers have liquidated animals owing to a shortage of grazing land. New Zealand's corn crop, centred in the North Island, will also suffer from the drought.
While rainfall should improve in the second quarter of the year as ENSO conditions subside, the drought has highlighted problems in New Zealand's water management. New Zealand's agricultural sector is blessed with plentiful supplies of water compared to its Australasian and Asian neighbours to the north. However, the country's underdeveloped water storage infrastructure means that this fact is not exploited to full advantage. Increasing investment in water storage and irrigation infrastructure would help prevent damage from spells of below average rainfall and would also help improve productivity in normal climatic conditions.
Apart from the dry weather, farmers are also struggling with the continued strength of the New Zealand dollar. Though the value of the Kiwi dollar against its US counterpart has fallen slightly since a peak in early Q409, at around US$0.70/NZD in later February, it was still high by historical standards. This has suppressed the domestic price of beef and dairy products. Beef prices have barely risen following the rapid slump in early Q409 when prices plummeted by more than 15% in little over a month. Growth in dairy prices has also stalled as world prices softened in the first month of 2010.
The poor financial state of many of New Zealand's dairy farmers was shown by the lacklustre uptake of a stock offering by dairy cooperative Fonterra. Following a restructuring of the cooperative approved by members in November last year, farmers are now able to buy extra shares up to 20% more than is required by their milk production. In January 2010, Bloomberg reported that the first stock offer under the new structure raised NZD271mn. This was a fairly poor showing considering that up to NZD1.1bn worth of shares were on offer. Many farmers are already saddled with high levels of debt following the crash in dairy prices in 2008. We expect interest among farmers in increasing their holdings in the cooperative will improve as the world economy continues to pick up in the coming year. Despite the poor showing in the stock release, Fonterra is pushing ahead with expansion plans in emerging markets abroad with new investments recenetly announced in Malaysia, China and Saudi Arabia.
Last Viewed
New Zealand Agribusiness Report Q2 2010Gas Chromatography Systems - World Review
MarketWatch: Personal Care - February 2010
Iraq Defence and Security Report Q2 2009
US Waste Management Industry: An Analysis
Become an Affiliate
Do you manage an industry specific website or blog? Are you looking to monetise your web traffic further? Are you a B2B website?
Why not offer your visitors industry specific strategic market reports and company profiles? Our Affiliate Program enables you to provide quality content on your website and to earn money from passing on visitors to our website. If a sale is made from your visitor, you earn commission (a fixed percentage of the price of a product).
Custom Research
Cannot find what you need? We can tailor a report for you. Complete the Custom Research Form and we will provide a quote.
News
Mahindra claims tractor market leadership
Explosives and Drilling Application Represents the Fastest Mining Chemicals Market in 2011
Chile dominates global copper market
Noble and CONSOL establish $3.4 bln JV
Exxon Mobil has largest proven oil and gas reserves of top 15 integrated companies
Market Insights
Currently there are no Market Insights in this sector.
