Green shoots may not pay off until mid-2010: analyst

NZPA | Friday November 13 2009 – 07:51am

Extract from the NB

Beef, sheepmeat and mussel farmers will have to wait until the middle of next year before export demand picks up, says a leading bank.

“Consumer sentiment in New Zealand’s key export markets is expected to remain subdued until at least the middle of next year,” said Wendy Voss, a senior analyst for agribusiness bank Rabobank.

Farmers could not expect an immediate surge in demand, even though the worst of the financial crisis appeared to now be over.

There was a chance things may improve before the middle of 2010, “but, realistically, demand won’t pick up until economic growth improves and unemployment rates begin to ease in key markets, such as the United States and Japan”.

Globally, livestock had not been an easy or attractive investment in recent years and this had led to the widespread liquidation of herds and flocks. Meat prices finally began to rise after this sell-off, but were then hit by the global financial crisis.

“Just when signs of economic recovery were beginning to emerge, the strong NZ dollar created the double whammy of another dampener on returns,” she said.

But the fundamental factors for the beef, sheepmeat and aquaculture industries had not really changed for the medium term.

Major global population and income growth was expected to boost demand for NZ meat and seafood exports.

Ms Voss predicted recovery in consumer confidence will support increased demand for meat and seafood, and tightening supplies in key beef-producing countries – the United States, Argentina, Uruguay and China – will create opportunities for NZ producers.

And tighter sheepmeat supplies in markets such as the US and European Union will create opportunities, but development of those markets on a reduced budget will be a challenge.

Indian consumers offered great potential for NZ lamb and mutton, and China’s aspiring middle-class offered a potentially lucrative market for premium aquaculture products.