The dairy sector is expected to continue underpinning the country's economy for the next four years, increasing revenue by $1 billion and milk flows growing by 3% a year by 2012.
The Ministry of Agriculture and Forestry's (Maf) situation and outlook report for the rural sector released this morning also forecasts a recovery in the ailing sheep meat sector over the same period, with revenue increasing from $1.6 billion this year to $2 billion in 2012 despite falling sheep numbers.
Wine is picked to become a $1 billion export industry in 2010, with production picked to rise from the current 85 million litres to 123 million litres earning $1.1 billion in 2010.
Deer numbers have fallen to a nine-year-low and were now 26% below the 2004 peak, but Maf expects numbers to recover in response to improving venison and velvet prices.
The outlook for lamb is positive due to less production internationally.Maf is picking the lamb schedule to increase nearly $1 a kg by 2012, from 342 cents a kg in 2008 to 438 cents a kg but export volumes to fall from 326,000 tonnes to 287,000 tonnes over that same period.
Crossbred wool, the bulk of New Zealand's wool exports, continues to struggle.
Adjusted for inflation, Maf says it was now worth just 6.2% of the price it reached at the peak of the Korean War, but growth in China should underpin some stability in prices and volumes.
Prices for fine and mid micron wool were expected to ease as the Australian wool industry recovered from drought.
New Zealand beef exports should benefit from a lower beef kill in our main market, the United States and an easing in the exchange rate.
Weaker international economic growth and increased dairy production from Australia, US, the European Union, China, India and South America was expected to result in lower demand and prices below recent peaks.
Maf expected the dairy payout to drop to $6.90 a kg milk solids in 2009 and then to average around $6, still higher than the average between 2002 and 2007.
