Best terms of trade in 40 years

Stats NZ reports:

New Zealand’s merchandise terms of rose 7.5 percent in the September 2013 quarter, Statistics New Zealand said today. The latest increase was due to export prices for goods rising more than import prices.

export prices helped lift the terms of trade to their highest level since 1973,” prices manager Chris Pike said. “Both the terms of trade and export prices have been on the rise since the start of this year, reflecting higher dairy prices.”

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.

In the latest quarter, the price of exported goods rose 8.9 percent, while seasonally adjusted export volumes fell 2.1 percent. Both price and volume movements were strongly influenced by dairy products.

In the September 2013 quarter, dairy export prices rose 24 percent to their highest level since 2008, and are now 46 percent higher than a year ago. Seasonally adjusted dairy export volumes fell 2.7 percent, which is the fourth consecutive quarterly fall. Seasonally adjusted dairy product values rose 20 percent, following a 4.7 percent fall in the June 2013 quarter.

So which political party wants NZ to doubly decimate our dairy herd (reduce it by 20%) in order to fight climate change? I wonder how many votes know Green party policy is to reduce NZ’s dairy herd by 20%, at a time that dairy prices are giving us the best terms of trade in 40 years. It’s almost an economic suicide note.

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