China rebounded very sharply from covid and that had been a real strength globally.
Tuffley says the US, a strong key market, is adding to that this year, creating income in other parts of the world that hopefully NZ can benefit from.
But for NZ, he says that will depend on how quickly it can get parts of its economy growing.
“It will be how quickly we can get borders open and at the moment that is really challenging,” Tuffley said.
“We are not at risk of dying but getting our economy growing links to the border opening and the vaccination programme – and we are behind.”
While strong spending growth in US manufacturing is expected to help the global economy, seaborne trade capacity remains under pressure with not enough ships, not enough containers and delays at ports.
“There will be a lot more uncertainty in these shipping lanes as we are not expecting change anytime soon, and our biggest port, Auckland, is functioning very poorly at present,” he said.
“The logistics challenges are expected to linger into next year and they are import and export challenges we didn’t expect as we come out of the pandemic.”
Tuffley says while the border remains “shut tight”, the agricultural industry will battle the labour challenges.
“Government wants local labour but it’s not working, there’s not the right skills – even to teach how to set the alarm clock and wake up to it and get up and shower and go to work,” he said.
“The border will not open materially until sometime into next year.
“There will be a lot more need in NZ to do on-job training.
“It’s going to be very important over the next couple of years to look after and retain staff.”
In the meantime, NZ’s agricultural commodity export prices remain resilient as growth lifts further following the US stimulus and pressure to supply whenever, wherever possible.
While there is still a lot of variation across dairy and meat, grains are showing a tighter supply and relative to demand, prices have tipped sharply higher.
This has been driven by hefty Chinese feed imports throughout 2020 seeking to ramp up domestic agricultural production, but China’s domestic land is not large enough to meet needs.
Tuffley says the wheat market is looking to be tight with feed grain prices in the driver’s seat because of the strong outlook for meat and dairy.
Maize and coarse grain crops are not looking to be enough to meet supply, again in the driver’s seat given the outlook for meat and dairy.
While the global economy is bouncing back, Tuffley says the pace of recovery will be determined by the success and speed of the covid vaccination.
Commodity and food demand is strong particularly in terms of grain and feed related prices.
“There is very strong demand for different commodities as we come out of this cycle with encouraging growing demand for NZ food and grains,” he said.
“We expect strong performance as we head through the end of the year with good underpinnings for the next while for agriculturally produced prices.”
Inflation is currently spiking at 3%, but Tuffley expects it will settle in the 2-2.5% range over the next two years, with the Reserve Bank starting to lift interest rates mid-2022, as the rebound happens quicker than initially thought.
NZGSTA gains and pulses chair Ed Luisetti says the forum brought industry stakeholders together to collaborate around key changes and opportunities for the sector.
The cereals and pulses sector remains a vital component of the arable industry, with growers producing 994,000t of wheat, barley, oats, and maize grain from 112,000ha in the 2020 harvest.
“Underpinning the industry is the top-class breeding of new and improved cultivars to help growers improve their productivity and profitability,” Luisetti said.
