New Zealand-Bankers forecast on farming.

NEW ZEALAND

FUTURE BLEAK.

ANZ Bank’s Cameron Bagrie, said " New Zealand can no longer look to the export sector as a source of growth in 2009,with world prices falling at a rapid clip". The big issue at the moment and what is really starting to detect is that volumes are falling. People are canceling order and in some instances they are actually stepping away from contracts".

This news, along with the fact that cold stores are full of beef and lamb, while dry good stores are full of milk powder, paint a far from rosy picture for the first quarter of 2009.

The dairy sector has been hit very badly, the 10% drop in prices coupled with the marked devaluation of the NZ dollar, mean that in real terms values of dairy products are as much as 40-50% less than last year.

Farmers who joined in the mass exodus, from the sheep industry into tillage and dairy farming, are perhaps in the deepest trouble.

First and foremast, the dairy industry meant large capital investment in buildings as well as stock. The tillage industry meant a large investment in new machinery.

The lamb and wool trades, are looking positively healthy in comparison, the large ewe slaughter is bound to push up lamb prices as the number decline.