New Zealand agribusiness outlook 2024: Smooth sailing or choppy waters

New Zealand food and fibre producers are no strangers to navigating challenges. In 2024, the currents of change will likely run deep for our export-focused nation, bringing yet another interesting year for New Zealand’s primary producers.


Report summary

1) Central bank actions will flow through to the cost of funds. The current restrictive monetary policy settings might start to ease up later this year – but don’t be getting hopeful for a throw-back to post-GFC rate levels. Immense challenges remain for central bankers in developed countries when making calls to cut – or not to cut. Our view is that the Reserve Bank of New Zealand, in step with the US Federal Reserve, will hold off official cash rate cuts until 2H 2024 – and only then, cuts are still likely to only be modest. Still, wholesale interest rates have eased back since Christmas and are flowing through to retail: some good news for those with loans and mortgages.

2) China will chart a challenging course for exporters. Our key export market is likely to continue to have a slow economy this year. Property price pressures, weak consumer confidence, dwindling demographics, and lethargic global consumer demand for Chinese exports will all play a role here. This doesn’t bode well for strong commodity prices for New Zealand food and fibre export products heavily reliant on China.

3) Escalating geopolitical tensions and conflict could provide challenges all the way to New Zealand. The catch-all phrase “geopolitics” will permeate cross sectors and countries in 2024. While the war in Ukraine continues to drag on – with no quick end in sight – recent escalations in the Middle East, as well as continued concerning China-Taiwan relations, along with fresh worries for North Korea all add to the number of regions to keep abreast of. Markets, arguably, are still to price for this risk.

The latest shipping disruptions in the Red Sea place upward risk of another global supply chain shock and for potential implications one does not have to look further than the 2021 snarled supply chains and energy crisis. Input costs for New Zealand food producers, along with freight costs for getting our products to global markets are to be watched. Of course, limited fiscal stimulus and weak global consumer demand could possibly see NZ exporters sail right through this storm in a teacup. For now, our global crude oil price outlook remains rather modest and well below USD100 per barrel – at least while the conflicts in the Middle East don’t spread wider.

At the same time, there are some tail winds and cross currents that could help with navigating the blue horizon this year.

The New Zealand dollar is anticipated to strengthen modestly against the US dollar heading to USc 64 towards late 2024. This sits in what could be close to the top end of the USc 58-65 range experienced last year.

The much talked about El Niño has delivered a mixed bag of weather so far. NIWA indicates that El Niño will be alive and kicking at least until Autumn 2024, but global institutions see chances for El Niño to fade. Variable weather has so far been generally supportive for food producers.

Sustainability and emissions reductions will remain a key theme for the year(s) ahead. Supply chains are working on greenhouse gas emissions solutions, emissions reduction trials – all the while testing consumers’ willingness to pay. On farm, most of the transitions are still to come as many farmers seek to either continue their knowledge journey or consider which changes to put in place.

One wildcard for 2024 remains. The year ahead will bring intense democratic activity. New Zealand’s new coalition government is settling in with priorities being decided. Yet elsewhere, this year will see almost half the global population queue at the polls. Superpower election results from the likes of the US, India, the European Union and Russia, will determine global stability for years to come. Pivotal trading countries like South Korea, Indonesia, and the UK are also among the list.

2024 promises to keep food producers on their toes. With many variables to pay attention to, setting sail for success this year will require a strategic mindset, agility and collaboration. Traits New Zealand farmers and growers have no shortage of.

  • Stefan Vogel

    General Manager – RaboResearch Australia & New Zealand
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  • Emma Higgins

    Senior Analyst – Agriculture
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  • Genevieve Steven

    Former Analyst – Agriculture
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  • Angus Gidley-Baird

    Senior Analyst – Animal Protein
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  • Dennis Voznesenski

    Senior Agriculture Analyst
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  • Pia Piggott

    Analyst – Associate Analyst
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  • Michael Harvey

    Senior Analyst – Dairy & Consumer Foods
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  • Vítor Caçula Pistóia

    Analyst – Farm Inputs
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  • Edward McGeoch

    Associate Analyst – Agri Commodities
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