December 2023 SOPI report

The Situation and Outlook for Primary Industries (SOPI) report, is released by Ministry for Primary Industries (MPI) twice a year and provides an update on the export performance of New Zealand’s food and fibre sector. The December 2023 update provides an overview of July 2022-June 2023 fiscal year and highlights the importance of the food and fibre sector to New Zealand’s economy and shows the continued strength and adaptability of this sector over time.

Some key takeaways include:

  • The food and fibre sector makes up about 82% of New Zealand’s merchandise exports and delivered $57.4 billion in export earnings in the year to 30 June 2023
  • Over the last decade food and fibre sector export revenue has grown 75 % to a record $57.4 billion in the year to 30 June 2023. Export revenue is forecast to temporarily dip to $54.3 billion in the year to 30 June 2024, but is expected to bounce back in the following year.
  • Across the entire supply chain (including production and processing), there were about 70,000 enterprises engaged in the food and fibre sector in the year to February 2023, with most of these (90%) operating in the agriculture, forestry, and fishing sectors.
  • Across the entire supply chain, employment in the sector totalled 358,000 in the year to 31 March 2021. This represents 13% of all jobs in New Zealand.

The report outlines some key issues affecting the food and fibre sector. This includes:

High input costs

Since 2020, farmers have been grappling with higher and increasing input costs, primarily driven by expenses related to fertilisers, animal feed, energy, and debt servicing. The types of expenses causing the rise in farm costs have changed over the last 2 years. In the year leading up to September 2022, the most significant increases were in fuel costs, with fertilisers comprising a notable portion of farm expenses. However, from September 2022 to September 2023, there was a decrease in fertiliser and fuel expenses but a substantial increase in interest rate expenses.

Adverse weather events

Some sectors are still dealing with the aftermath of Cyclones Gabrielle and Hale in the North Island, along with the challenges posed by dry weather and subsequent flooding in the lower South Island. Cyclone Gabrielle significantly impacted the supply of fruits and vegetables, contributing to the recent surge in food prices. The effects of these weather events have been substantial, particularly in regions directly affected by the cyclones, and many producers in these areas are still in the process of recovering.

A drier El Niño weather pattern

El Niño, characterised by warmer ocean waters in the central Pacific, has arrived in New Zealand and is associated with an increased risk of abnormally dry conditions. The forecast suggests potential challenges for agriculture, including a decline in milk production, reduced lamb slaughter-weights, and increased slaughter numbers due to feed constraints. However, it may also sustain high prices for fresh and processed vegetables, boost demand for grain, and improve the production of salmon and mussels in aquaculture. The ongoing El Niño is expected to continue through the summer, with above-average temperatures in the eastern part of the country and potential extreme temperature swings.

National Institute of Water and Atmospheric Research (NIWA) and MPI have launched a drought forecasting tool to help farmers and growers better prepare for adverse weather conditions. The free tool uses artificial intelligence and long-range weather modelling. It provides a weekly and 35-day outlook on the risk of areas experiencing dryness or drought.

What this means for vocational educational and training?

The insights in this report highlight the key role of vocational education and training (VET) in the food and fibre sector, which is crucial for New Zealand's economy. Developing skills through training is a key driver for increasing productivity and innovation in the sector. Notably, sustainability and climate resilience will continue to be significant issues for the food and fibre sector.

The findings in the report suggest we need to nurture adaptability and transferable skills. In this dynamic sector, our focus is not only on meeting current skill needs but also preparing individuals for future challenges. We are actively working on ways to recognise transferrable skills and increase flexibility in the VET system.