Spring is here - Plains Profile - September 2015

Tuesday, September 1, 2015

No matter the ups and downs of the economy, the seasons and the weather pay no heed. To say the last few months have been challenging for the dairy sector would be an understatement. Most farmers and their families have been just getting on with things. Calving and the seasonal work that goes with it have carried on regardless.

The expectation is that Global Dairy Trade Auction prices will continue to move around a bit over the next few months with a sustained upturn on the horizon. In the meantime the sector is very much in a cycle of careful cash management and that has a flow on into local support and service businesses. In short we are all feeling the pinch one way or another.

My advice to anyone who may feel the need is to talk and not to be reluctant or concerned about talking things through. Talking to advisors and other trusted people can only be of assistance. If you or someone you know is at a point where their personal or business relationships, their own health or the wellbeing of families and people close to them is at risk, then please don’t hesitate to seek out support, help and assistance.

On a more positive note I was pleased to see that another sector of our economy is doing exceptionally well at present. It was only a few years ago that our tourism industry was suffering hard as a result of the Global Financial Crisis. For nearly two years the number of international visitors was at record lows.

Now with our dollar at significantly lower levels and even with still much financial uncertainty around the world, the New Zealand tourist sector is booming.

Tourism is surging and it’s on its way to becoming our biggest source of overseas funds. For the first time ever three million tourists will have visited New Zealand in one 12 month period and the prospects for the future are very positive. What’s more impressive is that overseas visitors are staying here longer and they are spending more.

The point I’m making is that our total economy is broad and strong. It’s made up of many sectors. Our total economy has dairy as an important and vital component but dairy is not of itself our total economy. In fact dairy makes up about 5% of our total GDP.

Economists expect the pace of annual growth to ease to somewhere between 2.0 and 2.5 per cent next year. That’s still a solid rate of growth as our economy adjusts and adapts to the decline in dairy income which we know is part of the cycle of global commodity markets.

It is the kind of solid, sustainable growth that will deliver more jobs and rising incomes, while permitting business and mortgage borrowing costs to remain down at around current, historically low rates.

In addition New Zealand has notched up eleven consecutive quarters of employment growth, with 69,000 more jobs created in the past year of which over 24,500 were in manufacturing.

So to sum up, yes this has been a tough financial winter for many in our region, but we’ve seen this cycle before and we know we’ll come out of it. The broad based nature of our diversified economy means the future of our dairy sector and our total economy remains bright. Roll on spring!