Latest data from NZ’s Horticulture Export Authority (HEA) reveals the sector had a 6.5% annual growth rate in export sales to June this year.
HEA chief executive Simon Hegarty says while this sits below the 10% average enjoyed by the sector over the past 16 years, it was significantly better than he had anticipated earlier this year.
“If you had asked us how it would pan out back in March, we would have taken anything in positive territory at that stage,” he said.
The authority’s commissions its NZ Horticulture – Barriers to Our Export Trade report every two years, and over that time the sector has experienced a 25% surge in export earnings.
Alongside increases in volumes sold of key crops like kiwifruit and avocados, tariff reduction has played a big part in improving value returns to growers over the last two years.
The report highlighted the $152 million of tariffs paid by NZ growers is down from the $214m paid two years ago. The bulk of that reduction comes through in lower rates on produce sold to nations including South Korea and Japan.
“Japan has been the big one. They came into the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) agreement from late December 2018. They (tariffs) had been as high as $30m and have dropped to $5m,” Hegarty said.
The sector has also benefited significantly from South Korea also lowering rates, coming down from $16m in 2018 to only $1m today.
Hegarty confirmed the EU remains the industry, and NZ’s, bugbear with 60% of the $152m paid incurred in EU tariffs.
The bulk of the tariffs are incurred by kiwifruit, the single largest crop sold there.
In 2018 the cost of tariffs to the EU on kiwifruit alone amounted to nearly $41m, almost half the total tariffs paid by the sector at that time. This equated to 66 cents per average fruit sized tray, costing an average kiwifruit grower about $8,000 a hectare.
Current tariff rates on produce are 8% and the EU remains the only one of NZ’s top five trading partners to have not reduced rates, or be at zero.
But he says determining when an EU free trade deal may be struck was hard to pick, given a full Brexit settlement had yet to be determined.
“It is certainly a high priority. In 2018 on a FOB basis we paid just under $50m and now that has risen to $61m. That compares to Japan going from $36m to $5m,” he said.
While lower or no trade barriers may be more common among NZ’s horticultural trading partners now, non-tariff barriers are proving problematic, he says.
These include sanitary and phytosanitary conditions and compliance that often includes detailed paperwork.
“Their impact is to cause longer delays for inspection. There is a trend for countries to apply more of these which can frustrate exports, and in doing so are a form of protection,” he said.
Australia has been one country throwing up problems on a range of products.
“On arrival the inspections are what we believe to be a less efficient system than what they could have had, and this has added considerable delays, especially to perishable products,” he said.
Consumer demand for quality fruit in a covid environment has held up well, with increased awareness about the need for healthy eating that boosts immune systems.
But Hegarty says NZ is far from out of the woods, given the challenges that remain over harvesting this season’s crops and shipping it in a timely fashion.
“There has been a lot of disruption over the flow of products around the world at the moment. Vessels due to come in and unload cannot get port access and miss a port, it has a domino effect,” he said.
Disruption was significant in European ports and in the US there were issues trucking inland bound containers from ports. Similarly in Brisbane, containers were not being unloaded and instead heading to Sydney, only to be trucked north.
He says this brings a lot of extra costs that do not always show up here, like congestion charges, extra power charges to plug in chilled containers.
