So farmers and growers should be positive about their prospects as producers of high-quality protein and plant products despite the immediate effects of drought and global fears about coronavirus, Agriculture Minister Damien O’Connor says.
“We have travelled around and spoken with a number of large scale exporters.
“They are saying they are finding there is already a bounce back from China where demand is again strong for products.”
Reports of freed-up container space and improved supply chain movements in China have become more frequent as the number of coronavirus cases reported in China starts to ease back.
O’Connor acknowledged criticisms about NZ being too reliant on China, which now accounts for almost a third of this country’s exports.
But the advantages of NZ’s established trading relationship cannot be ignored.
In 2008 NZ got through the global financial crisis thanks largely to its trading relationship with China, benefiting from a newly minted free-trade agreement.
“It is a different situation now with coronavirus but our relationship with China is even stronger than it was then.
“Yes, there is interdependence there and that has risks and the virus has reminded us of that risk.”
Finance Minister Grant Robertson has officials designing a package to support the economy when it comes out the other side of the coronavirus outbreak, including ways to diversify the nation’s international markets.
However, China is prepared to pay top prices for top-end produce and that cannot be ignored, O’Connor said.
The trading relationship might yet also help also ease NZ through the coronavirus crisis.
The MPI report highlights the value the Chinese market, in particular, continues to put on food products, with dairy, meat and horticulture all predicted to rise in value.
Dairy appears the least affected by the virus with annual export revenue forecast to rise 6.2% to $19.2b, up despite the forecast being revised back $400 million because of drought.
The report points to continuing strength in cheese and casein prices and good export prices meaning strong payouts are still likely.
Red meat and wool have also had a $220m reduction factored in but are still expected to rise 0.3% in earnings.
That decline has been attributed largely to the lost supply opportunities that arose earlier in the year in China, with some products being diverted to lower earning markets.
Forward demand appears strong, in part because of the continuing impact of China’s swine fever outbreak on pork supplies.
Horticulture will enjoy a double header of increased volume and value in exports, MPI says.
Values are forecast to surge 3% and hit $6.3b. Kiwifruit and apples are the main drivers.
The biggest losers out of the coronavirus remain forestry and seafood where earnings are expected to fall by 18% and 2.2% respectively.
Meantime, NZ also appears to have ridden out the United States-China trade war in relatively good form.
The report notes the easing of tensions and the different product mixes between NZ and US also reducing the impact.
Brexit uncertainties do, however, remain and O’Connor pointed to concerns over European demands on geographic indications on products as the main sticking point.
Federated Farmers vice-president Andrew Hoggard said drought is by far the biggest concern for many farmers while coronavirus appears to be taking greater hold in Europe as China’s infection rate subsides.
“With so much of our trade in Asia now it may not impact as much as we thought but it is still early days.”
