Postive signs for agriculture are starting to emerge from what is widely tipped to be a “progressive” global economic recovery.

While economists still have “grave concerns” surrounding financial conditions in Japan and Europe, the situation in China and the US bodes well for New Zealand farmers.

ANZ and ASB banks are tipping 2-2.5% economic growth over 2010 after a 3% contraction.

Similarly, both banks are on the same page in picking a “progressive, rather than sharp” economic recovery over the next three to four years. Of note to farmers are predictions that the export sector will to be the quiet achiever over that period.

ANZ chief economist Cameron Bagrie says exporters will be helped by a lower exchange rate, high commodity prices and key trading partners returning to growth trends.

He says an increasingly firmer US dollar – on a weaker euro – is set to be the key feature of 2010.

“We have the New Zealand dollar gradually declining from current levels towards the low to mid-$US60c area by the second half of next year.”

“New Zealand stands to benefit hugely from China’s increasing demand for high-quality agricultural products,” Bagrie says.

“China is facing serious water shortage problems in its northern plains. This means it will become difficult for China to maintain the current scale of agricultural production in the future.”

On top of domestic supply constraints, China’s affluent middle and upper classes – now numbering 130 million and larger than the Japanese population –continue to demand more proteins and high quality agricultural products.

“This will help keep soft commodity prices elevated.”

ASB chief economist Nick Tuffey concurs: “Positives for exporters include the robustness of the Australian economy and the strength of the recovery in Asia.”

On the currency front, economists suggest factors that have kept the kiwi dollar trending upwards since March 2009 “look to have been broken”.