The dairy industry's plight was underlined in New Zealand's trade figures yesterday, with calender 2015 exports of milk powder, butter and cheese down 21%, or $3billion to $11.5billion.
The data followed Fonterra's announcement yesterday of a downward revision of its forecast milk payout, meaning at that level billions more dollars would be wiped from the economy and the large majority of its farmers would be unprofitable.
For the year, exports overall fell 2.2% to $49billion while imports rose 2.5% to $52.3billion - the annual trade deficit standing at $3.5billion; or 7.2% of exports, according to Statistics NZ (SNZ) data released yesterday.
China finished the year as New Zealand's top trading partner, up 8.6% to $83million for December; underpinned by dairy-related sales up by $37million in December, while Australia was in second spot, up 2.4% to $18million, for December.
For December, the trade deficit between $4.48billion of imports and $4.42billion of exports narrowed to $53million, while the annual trade deficit declined from $3.69billion in 2014 to $3.54billion for 2015.
Westpac senior economist Michael Gordon said the narrowing of the deficit in December to $53million was "slightly better'' than market expectations, but fell short of Westpac's expectation of a small surplus.
While seasonally adjusted exports were down in December, as meat and dairy volumes fell back following a boost in November, there was a strong lift in exports, in logs, oil and seafood, Mr Gordon said.
Petroleum imports "rose strongly'' in volume but prices fell, reflecting the renewed plunge in global oil prices.
ASB's rural economist Nathan Penny said the December deficit was "in line with expectations'', while the deficit for 2015 stood at $3.5billion.
"Meat exports led the [December] fall, dipping 10.2%.
"Dairy export values were largely flat for the month,'' Mr Penny said.
BNZ senior economist Craig Ebert said the trade data told of economic activity, on average, "continuing to progress reasonably well'' at the end of 2015.
The current account deficit was "holding in relatively well'', despite weak dairy export revenue.
December's merchandise exports of $4.42billion were above market expectations and below the BNZ's, but all in a "very marginal way.
"It meant they were up 1% on a year ago,'' he said, but that was weighed down by a 9% drop in the value of dairy exports.
Dairy export tonnage expanded 6% on an annual comparison but Mr Penny said it "must be close to a last hurrah'', given year-on-year dairy production had been falling for several months now.
SNZ international statistics senior manager Jason Attewell said the depreciating dollar had an upward effect on import and export prices.
Imports rose $1.3billion, but exports fell $1.1billion as the impact of falls in world prices, such as for dairy products, was greater than the upward exchange rate effect.
Despite the fall in the value of dairy exports, the quantity of milk powder, butter, and cheese rose to a record high of 2.9million tonnes, up 2.9% from the previous high in 2014, SNZ reported.
The quantity exported to China was 21% of the total in 2015, down from 28% in 2014.
