This is according to the New Zealand Ministry of Primary Industry. ‘Economic Renewal for Primary Industries June 2020’The report, released by the ministry’s Economic Intelligence Unit (EIU) in lieu of the annual Primary Industry Situation and Prospect (SOPI) document based on COVID-19.
“Because the situation changes almost every day and the outlook for our sector is more uncertain than before, [this report reveals] how COVID-19 disrupts New Zealand’s primary industrial exports, and how the primary sector can move forward after the biggest economic shocks from generation to generation, ” Said the EIU.
Seafood is highlighted as one of the country’s most risky export commodities, mainly because of its high dependence on China and Hong Kong for 35% of this trade, and moreover in terms of shellfish at home such as rock lobster, which 93% falls to China and Hong Kong.
“New Zealand’s seafood export revenues were tracked 27% in February and down 44% in April year-on-year due to lockouts first in China and then in New Zealand,”Said EIU.
“With 35% of seafood exports going to China, fresh seafood is influenced by COVID-19 earlier than other industries, [but though] the Chinese market is slowly recovering and the seafood market is starting to reopen, [numbers still] stay well below normal. “
Rock lobster exports were particularly hard hit with a 82% year-on-year decline in revenue between February and April.
The future of seafood remains uncertain as it moves forward because of its high dependence on air transport for transportation as well – more than 30% (NZ $ 593 million / US $ 382.2 million) seafood exports were transported by air between June 2018 and June 2019 including lobster rock to China, snapper to Australia and salmon to the United States.
“The majority of exports through air shipping in New Zealand are carried out by commercial passenger aircraft and not just cargo shipping services [so] fewer passenger flights leaving New Zealand means that shipping capacity will be reduced directly, “States the report.
“The number of domestic and international flights departing from major air shipping partners has also dropped significantly: 40% to 50% lower than China since February, 78% lower than Australia in April, and 45% lower than the US since early April . “
“The effects of the reduced shipping capacity for goods vary [and revolve around] increased air shipping costs and restrictions on access to certain markets. “
Because many foods require fresh air freight, trying to re-route or find alternative routes will have a negative impact on the value of the product even after making it to the desired destination.
“Redirecting goods directly or that is easily damaged through third party countries has the potential to reduce shelf life and product value, or to request goods to be sent in frozen rather than fresh form at reduced value,”Said EIU.
The New Zealand dairy industry does not see a direct negative effect due to COVID-19, and in fact we previously reported that this sector is one of the few remaining. stable in terms of exportsEven at the height of the pandemic.
Unfortunately, this situation is not expected to take place because export profits are supported by good prices in milk which are expected to fall, coupled with global conditions.
“Dairy exports grow NZ $ 519 million (US $ 334.4 million) year-on-year for the period between March 25 and June 3, [but] looking for towards the 2020/21 season, falling commodity prices for dairy exports and weakness in the global food service and milk consumer markets [are expected to impact this], “The report said.
“[As it is], the weighted average price on the Global Dairy Trade platform has dropped 15% since the end of January, and is now 13% lower than at the same time last year, [whereas New Zealand] the price of agricultural milk for the 2020/21 season has dropped 14% from NZ $ 7.30 (US $ 4.70) per kg of solid milk to NZ $ 6.30 (US $ 4.06). “
Other factors that are expected to have an impact on the dairy sector include drought conditions in the country, as well as increased subsidies in the US and EU.
“While the aim of these subsidies is to provide economic stability, support rural communities and protect food supplies, there is a risk that in the long run they can add to the negative economic impact of COVID-19 and increase volatility in the market by encouraging increased global production,”Said EIU.
Fruit as saving grace
That said, not all doom and gloom for the New Zealand food trade because exports of fresh fruit is one of the few export sectors is expected to see growth amid all the uncertainty.
“Global demand for fresh fruit remains strong, especially in Europe and North America, because fruit usually relies more on retail and online sales than food services,”Said the report writer.
“There is also an overall increase in demand for healthy products such as fresh fruit so on that basis, exports of New Zealand’s fresh fruit, including apples, kiwifruit, and avocados, are expected to have better prices.”
Data from NZ Stats shows an 18% growth in year-on-year revenue of NZ $ 274 million (US $ 176.6 million) in March for apple and kiwi exports, which is expected to continue on the back of increased yields for kiwifruit ( 6% increase) and apples and pears (5%) in 2020 compared to 2019.
Much is expected of kiwifruit in particular, which has so far managed to avoid significant disruption due to COVID-19 and in fact is expanding its export destinations through companies such as the famous Zespri Kiwifruit.
Zespri has grown from strength to strength in Asian expansion in recent months even through a pandemic, especially in Indonesia ChinaAnd Japan.
“While there are ongoing challenges, all ports in Japan, Korea and Europe are functioning and have available manpower, such as the terminal we use in China,”Zespri China Head of Corporate Affairs, Ivan Kinsella said FoodNavigator-AsiaPrevious.
“We see strong demand in our main markets for fresh, healthy fruit like kiwifruit [and] the ship has departed for Asia (Japan) and China according to plan. “
Zespri also recently launched Kiwifruit is redTo Singapore with Japan in the pipeline, which could serve as another export flow for New Zealand moving forward.
But overall, the New Zealand government is planning a road map to reduce the impact of COVID-19 by focusing more on its main sectors.
“Before COVID-19, the primary sector was already on the path of transformation. Given the impact of COVID-19 on other export sectors (such as tourism), we now need to accelerate this transformation, “MPI said in a statement.
“The government is looking to release a road map to accelerate the economic potential of the primary sector in the coming weeks [which] bringing together opportunities and actions that reach primary sectors [to] operating in concert and achieving significant results in a decade. “