Terms of trade near record levels


New Zealand’s terms of trade are at the best level since the 1970s:

In the March 2014 quarter, the merchandise terms of trade rose 1.8 percent, Statistics New Zealand said today. The latest increase was due to export prices rising and import prices falling.

Terms of trade is a measure of the purchasing power of New Zealand’s exports abroad. An increase means New Zealand can buy more imports for the same amount of exports.

“Five consecutive quarterly rises have lifted the terms of trade to its highest level since the September 1973 quarter,” prices manager Chris Pike said. The terms of trade is now 1.7 percent below its all-time high in the June 1973 quarter.

In the March 2014 quarter, the price of exported goods rose 0.8 percent, and seasonally adjusted export volumes rose 1.6 percent. The trend for export volumes has reached a new high, and is 4.2 percent higher than the previous high point in the December 2012 quarter.

Dairy prices (up 2.3 percent) were the top contributor to total export prices. Seasonally adjusted dairy volumes fell 4.3 percent, following a 24 percent rise in the previous quarter.

Meat prices rose 2.1 percent and meat volumes rose 6.6 percent, leading the rise in export values. The trend for meat volumes has reached a new high – it is now 5.3 percent higher than the previous high point in the September 2006 quarter.

Prices for imported goods fell 1.0 percent in the March 2014 quarter, following a 2.7 percent fall in the previous quarter. Petroleum and petroleum products (down 3.5 percent) contributed the most to the overall decrease in import prices due to lower prices for crude oil.

Import volumes rose 2.3 percent, following a flat December 2013 quarter. The trend for import volumes has been rising for six consecutive quarters – by a total of 14 percent. 

The price and volume indexes for exports and imports of goods are compiled mainly from overseas merchandise trade data. . . .

The opposition and many commentators keep saying the value of our dollar is too high.

That isn’t all bad and the near-record terms of trade is one of the positives from that.

Our purchasing power is higher, exports are still doing well – in spite of the value of the dollar – and imports are costing less.

The opposition want our dollar to be worth less.

That would immediately reduce the value of every dollar everyone earns in New Zealand, reducing the purchasing power of all of us.


Lowest inflation rate this century


The consumers price index (CPI) increased just 0.7 percent from the June 2012 quarter to the June 2013 quarter, Statistics New Zealand said.

“This annual increase is the lowest since 1999, and the fourth annual increase in a row below 1 percent,” prices manager Chris Pike said.

The lowest inflation rate this century is something for which we should be grateful.

And those wanting the government and/or the reserve bank to “do something” about the high value of the New Zealand dollar should note that part of the reason for low inflation is that the higher dollar makes imports less expensive.

Inflation is theft. It steals the real value of wages and savings and hits the poorest hardest.

It’s less than 30 years since inflation was near 20% and interest rates were even higher.

Turning that around wasn’t without cost but some on the left have short memories.

Their tax and spend policies could easily start taking us back there.
Low inflation and low mortgage rates give families a chance to get ahead.  www.stats.govt.nz/browse_for_stats/economic_indicators/CPI_inflation/ConsumersPriceIndex_MRJun13qtr.aspx

Rural round-up


Fixed price contracts not priority for most meat companies – Marie Taylor:

As debate on the state of the red-meat sector continues, Marie Taylor asked 12 meat processors what they had to offer farmers in terms of stable pricing they could bank on.

Fixed-price contracts are few and far between in the meat industry.

The New Zealand Farmers Weekly surveyed 12 meat companies in New Zealand to find out what was on offer in terms of predictable, stable pricing farmers could bank on.

The most encouraging responses came from Silver Fern Farms, Ovation, Progressive Meats, Lean Meats and Firstlight Foods. . .

New animal welfare strategy released:

Minister for Primary Industries Nathan Guy has launched the New Zealand Animal Welfare Strategy today, setting out a high level framework for how we treat animals.

“The strategy Animal Welfare Matters sets out a formal foundation for New Zealand’s animal welfare legislation and policy,” says Mr Guy.

“It says that it matters how animals are treated, and that we have responsibilities toward animals. It also says that using animals for activities like farming and racing is acceptable as long as it is humane.”

The strategy lists four main routes to improved animal welfare: . . .

Federated Farmers back new animal welfare strategy:

Federated Farmers is fully supporting the release of the Ministry for Primary Industries (MPI) Animal Welfare Strategy.

“The strategy reflects Federated Farmers own policy on animal welfare,” says Bruce Wills, Federated Farmers President.

“It really does matter how animals are treated and farmers have both a moral and ethical responsibility to ensure requirements are adhered to.

“New Zealand’s farmers are actually world leaders in integrating animal health and welfare into their farm management planning. Something recognised by the World Society for the Protection of Animals (WSPA).

“This strategy reaffirms our international leadership and reputation. It is a strategic means to ensure this reputation is not only maintained but improved and Federated Farmers supports it. . .

Word of Hawke’s Bay Wines Spreading In China:

Hawke’s Bay wines, in particular high quality reds, are steadily gaining exposure in the expansive Chinese market with two recent initiatives adding to the awareness. 

Four influential Chinese media writers visited the region and were hosted by Hawke’s Bay Winegrowers and five wineries, while four local wineries attended one of China’s most important international wine trade fairs, the Chengdu Wine & Spirits Fair.

Immediately after her visit, Sophie Liu, an independent wine writer and educator, has blogged positively about her time in Hawke’s Bay and is planning articles to appear in Wine World, Wine & Taste and World Cuisine magazines, as well as http://www.wines-info.com

Her colleague Fan Yiren, who is one of China’s most influential social bloggers with accumulated fans of 63,374,307 on one site and over 330,000 on Weibo (Chinese Facebook equivalent), blogged daily. He is also planning to write four to five feature blogs. . .

At home and overseas, New Zealand seafood is on the dinner table:

When fish is on the menu, the type of fish you get can depend heavily on where you live.

Salmon, tarakihi, and gurnard are the most-commonly available fish species in supermarkets and fish shops as tracked in the consumers price index (CPI), Statistics NZ said today. However, some species are not widely available in all regions.

“Snapper and trevally are generally available in shops from Nelson northwards, but barely feature further south where sole is more commonly available,” prices manager Chris Pike said.

New Zealand’s seafood industry, published today by Statistics NZ, gives an economic overview of selected parts of the country’s seafood industry and provides a comparison between 2007 and 2012. . .

Trials show there’s a lot to love about molasses:

A further round of farm trials in the Waikato has reconfirmed the value of Crystalyx Dry Cow dehydrated molasses blocks as a Dry Cow winter management tool.

The results were shared at a farm open day in Putaruru, in March, with Jackie Aveling, Animal Nutrition Manager at Altum, saying the good turnout reflected farmers’ interest.

“Overseas trials over some 20 years have consistently confirmed the performance of dehydrated molasses blocks. Farmers want to know if the same results can be achieved in New Zealand. Our trial work with Crystalyx, which is specifically formulated for local conditions, gives them the facts they need to support its performance.”

The repeated trial work done by Dr Mark Oliver, science director of the Liggins Institute’s Ngapouri Farm research station near Rotorua, which saw a control herd supplemented with magnesium and trace elements following current best practice guidelines, and the other Crystalyx Dry Cow. . .

Organic Farm Pioneers High-tech Voluntary Milking System:

Robotic or voluntary milking systems, where the cows choose for themselves when they want to be milked and the whole job is done by a computerised machine, are still as rare as tits on a bull in New Zealand.

Heritage Farm, a certified organic dairy farm at Karaka, just south of Auckland, was the first farm in New Zealand to install a DeLaval Voluntary Milking System.

Early adopters David and Cathy Yates, who own and run Heritage Farm with their son Brian, are really pleased with their move to computerised milking. They have now had two and a half year’s experience with the system and say that its benefits go way beyond not having to spend hours in the milking shed every day putting on and taking off teat cups. They include improved animal health and welfare, and better pasture and feed management – all made possible by the quantity and quality of the data that the system provides, along with doing the manual work of milking. . .

Supply and demand stronger influence on price than GST


The main contributer to the .3% fall in the Consumer Price Index in the December quarter was vegetables.

Statistics NZ prices manager Chris Pike said:

Vegetable prices fell 25 percent in the December 2011 quarter, causing a 2.2 percent fall in overall food prices. 

“The larger-than-usual fall for vegetables reflects a supply shortage in the three months to September,” Mr Pike said. “Basically, vegetable prices were higher than normal last winter, then fell to normal levels towards the end of the year. If vegetable prices had remained constant in the December 2011 quarter, the CPI would have risen 0.1 percent.”

Labour’s election pledge to take GST off fresh fruit and vegetables was never based on reason and these figures show supply and demand have a far bigger impact on price than tax.

Gosh – look at the price of fresh veg


Vegetables were the key contributer to the fall in food prices last month:

Food prices fell 0.8 percent in the December 2010 month, Statistics New Zealand said today. This follows a 0.6 percent decrease in November 2010. Seasonal falls in vegetable prices were the key contributor to lower food prices in November and December 2010.

Vegetable prices fell 7.9 percent in December with lower prices for tomato, lettuce, capsicum, cabbage, and broccoli. This decrease follows a 9.9 percent fall in November. “Prices for green vegetables were affected by unseasonal weather in September and October, and prices in November and December 2010 were still well above usual levels,” Statistics New Zealand prices manager Chris Pike said.

Wonder if Labour still thinks its a good idea to remove GST from fresh fruit and vegetables when once more we see that weather and seasons have a far greater impact on price?


Weather influences food prices more than GST


The price of fruit and vegetables dropped 9.9% in November althought they were higher than a year ago.

Food prices fell 0.6 percent in the November 2010 month reflecting lower vegetable prices, Statistics New Zealand said today. This follows a 2.2 percent increase in October when food prices were affected by the rise in GST, and a 0.7 percent increase in September.
Vegetable prices fell 9.9 percent in November. “Lettuce, tomato, and broccoli prices fell in November, as they usually do. However, prices are much higher than this time last year, reflecting poor weather in September and October,” Statistics New Zealand prices manager Chris Pike said.
Grocery food prices were flat (up 0.1 percent) in November 2010. This follows a 1.7 percent rise in October, when about half the prices collected that were not affected by discounting rose 2.0 to 2.5 percent (reflecting the GST rise).
Restaurant meals and ready-to-eat food prices rose 0.6 percent in November 2010, following a 1.9 percent rise in October.

The important point is that poor weather in September and October was the biggest influence on the price rise of fresh fruit and vegetables.

Yet more proof of the futility of Labour’s policy to take GST off a small part of most people’s grocery purchases.

Labour to take tax off weather


The Labour Party has announced a further plank in it’s economic policy – a proposal to take the tax off weather.

Party spokesperson Fairly Desperate made the announcement in response to the release of the September Food Index :

Fruit and vegetable prices rose 2.6 percent, with broccoli prices rising 49.5 percent and lettuce prices increasing 13.5 percent. “Vegetable prices were affected by unusually windy, wet, and cold September weather in different parts of the country,” Statistics New Zealand’s prices manager Chris Pike said.

 “Obviously the weather has a significant impact on the price of food and our policy to take the tax off it will make a huge difference,” Mr Desperate said.

When asked to quantify the cost and benefit of the policy Mr Desperate said that wasn’t the point.

“We don’t want to let figures get in the way of a good sound bite, but you can be sure that tax-free weather will be a winner with the people we’re trying to confuse in to voting for us.

“We’ll be the only party offering voters tax-free weather and that’s sure to resonate with people at the supermarket and ballot box.”

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