BNZ Rural Wrap August 2026

Research Rural Wrap 12 August 2026

Buoyant but at risk • Primary sector exports strong The uncertainty and volatility themselves are unhelpful – • Many factors in play for what comes next let alone the net lift in costs. It all makes budgeting • Geopolitics and trade developments important difficult. Indicative of the upward cost pressure, Dairy NZ’s • El Nino a key risk this season recent quarterly update saw 2026/27 forecasts for farm • Disease, inflation, and interest rates on the radar too working expenses up nearly 10% on the previous season, • Global growth and NZD provide reasonable backdrop and the season’s average breakeven milk price estimate rose to $8.79kgMS. New Zealand’s primary exports have been buoyant over the past 18 months or so – with elevated pricing and Second, trade developments. Another wave of US tariff decent volumes across many major products. Confidence changes occurred in late July, pushing ahead with imposing in the agricultural sector is strongly positive. 10% to 12.5% tariffs on imports from most of its major trading partners, including New Zealand. This change was This is quite remarkable in the context of global goings on not a surprise. The new tariffs follow the expiry of previous especially given that assessing what comes next is fraught temporary tariffs. Many countries have rejected the with difficulty due to a litany of uncertainties and risks that forced-labour premise of the new tariffs. could materially and abruptly alter the outlook for better or worse. There are many items on the radar. NZ goods entering the US will now generally face a 12.5% tariff. This is up from the previous temporary 10% tariff, Buoyant though below the 15% rate in place before the US Supreme Court ruled against it earlier in the year. While NZ Primary Exports 60,000 the changes are relatively small and NZ faces similar US Millions 50,000 tariff rates to many others, there is still an added cost to absorb – either by US consumers, as many have argued has 40,000 largely been the case to date, through the supply chain, or both. Ongoing changes in themselves create uncertainty 30,000 and adds to the cost of trade. 20,000

The influence of the tariff changes will vary by sector. 10,000 Some products like beef and kiwifruit remain exempt. The 0 US tariff on NZ lamb has increased to the same as applied Annual to Australian lamb, a net negative at the margin. A US Source: BNZ, Stats NZ investigation into whether to impose additional tariffs on First, geopolitics. Events in the Middle East remain Australian lamb imports continues. Uncertainty remains. unforecastable. The to-and-fro between hostilities to talk On a more positive note, NZ continues to pursue trade of peace deals has caused violent swings in oil and fertiliser agreements including recently starting discussions with prices. Meanwhile, the Russia-Ukraine conflict continues. Switzerland and finalising an agreement on essential Strikes on ships are disrupting trade and exerting its own supplies with Singapore. The NZ-India free trade pressures on energy and commodity prices. agreement is expected to come into force later this year, In just the past five months, oil prices have swung up with evidence of activity picking up ahead of it. Off a low toward $US120/bbl, unwound to near $US70/bbl, jumped base, NZ exports to India lifted 24% in the June 2026 to $US100/bbl, and back to $US80/bbl. They currently sit quarter compared to the equivalent quarter a year earlier. near $US90/bbl. Who knows where they will be when you Benefits from previous agreements continue to read this. International fertiliser prices have also swung accumulate, such as beef exports to the UK that nearly wildly. Domestic fertiliser prices are materially higher than tripled in the year to June 2026 compared to the previous a year earlier. year.

Trade agreement benefits protective measures. Again, this adds cost. The bigger NZ Beef Exports To UK concern is if bird flu hits poultry restricting chicken and egg 500 production. Millions

400 Major exporter milk supply growth large, but slowing Thousand tonnes, 300 annual change Milk Production 1500 NZ Australia 200 US 1000 EU-27 + UK Top 4…