New Zealand's fresh produce exports are benefiting from a weaker New Zealand dollar (NZD), which has declined by 6–8% against major trading currencies over the past year. The lower exchange rate has boosted returns for key horticultural sectors, including apples and kiwifruit, which make up a major share of the country's primary exports.
According to ANZ agricultural economist Matt Dilly, the ANZ Commodity Price Index rose 14% in NZD terms over the past 12 months, while the world price index increased 6.2%. The 8% gap reflects the impact of the weaker NZD. The ANZ index tracks global prices for dairy, horticultural products, timber, and aluminium, with weightings based on export volumes from the previous year.
Dilly attributed the decline in the NZD to the Reserve Bank of New Zealand's monetary policy decisions, including a 50-basis-point cut in the official cash rate, as well as ongoing global trade uncertainty. "World trade uncertainties, particularly the United States-China tariff escalation, are weighing heavily on our export outlook," he said. The NZD has reached new lows each month since July and currently trades around US$0.57, near its April low of US$0.55.
ASB Bank's October 3 Commodity Weekly report also noted the currency effect. Its NZD index increased 11.6% year on year, compared to a 5.5% rise in the US dollar index, showing a 6% benefit from the weaker exchange rate. Senior economist Chris Tennent-Brown said the depreciation of the NZD has supported export returns for dairy and horticultural producers.
He added that factors such as lower interest rates, weak economic growth, and reduced terms of trade have contributed to the currency's decline. However, these conditions are not dampening farmgate returns. "Normally, strong commodity prices would cause the NZD to rise, but it remains weak for other reasons," he said.
Tennent-Brown added that currency hedging strategies are helping to stabilise export earnings. "We think the NZD will return to nearer US60c next year because that is its fair value," he said.
Source: FarmersWeekly
