Tuesday, 17 March 2020 07:55

$1.3b coronavirus hit looming

Written by  Peter Burke
With over 130,000 cases worldwide Coronavirus isnow a pandemic. Dark areas have more than 10,000 cases. With over 130,000 cases worldwide Coronavirus isnow a pandemic. Dark areas have more than 10,000 cases.

Covid-19 is forecast to strip more than $1.3 billion dollars off New Zealand’s primary exports in the coming year, including $390 million off dairy exports.

This latest revelation comes in the Ministry for Primary Industries latest Situation and Outlook Report, released late last week. 

In December MPI were forecasting that primary exports for the year ending June 2020 would be $47.8 billion – now this has been reduced to $46.5 billion, a mere 0.5% up on the 2019 total. It is also warning of further downward revisions. The report came out the day World Health Organisation declared coronavirus a pandemic. 

The report states that while the geopolitical tensions on trade such as Brexit and the US-China trade war have eased somewhat, coronavirus has added new uncertainty for NZ primary exporters. It notes that the seafood and forestry sectors have been particularly badly hit. But it points in the last month dairy commodity prices have softened and the average price on the GDT fell 7.5%.

It says there has been weakness in milk powders, butter, and anhydrous milk fat. However, despite the disruptions in Chinese markets, North Asian buyers have continued to be active in recent auctions, with volumes traded higher than at the same time the previous year. It adds that prices for cheese and casein have continued to strengthen. 

MPI predicts that continued declines in key commodity prices will impact farm gate milk price payouts but it says given the strength of current export prices, strong payouts are still likely and will continue to support dairy farmer profitability this season. It say an average payout of $7.15/kgMS is likely.

Fonterra will announce its half-year results this week: coronavirus is likely to have an impact. 

Accoriding to MPI, while revenue from the dairy sector is down on the December forecast, it is still ahead of the previous year and is expected to earn about $19.2 billion. The report also notes that despite the drought in the major dairying regions milk production for the first eight months of the season was up by point five of a percent.

Meat and horticulture exports have also taken a hit with revenue from meat down by $220 million and horticulture by $110 million.

The as yet unknown factor says the report is the fate of the NZ dollar which has already weakened since the beginning of this year. MPI says should the weakening in our key agricultural commodity prices continue to worsen, they would expect further adjustments in the NZ$ to help offset some of these effects for primary sector exporters. And MPI warns further revisions downward in future forecasts are likely.

More like this

Gaslight much?

OPINION: Labour leader Chris 'Chippy' Hipkins is carrying on the world-class gaslighting of the nation that he and his cohorts started after their disastrous Covid response; now trying to undermine the Covid inquiry to protect his own backside.

Bikinis in cowshed

OPINION: An animal activist organisation is calling for an investigation into the use of dairy cows in sexuallly explicit content posted on social media and adult entertainment subscription site OnlyFans.

Editorial: Agri's mojo is back

OPINION: Good times are coming back for the primary industries. From sentiment expressed at Fieldays to the latest rural confidence survey results, all indicate farmer confidence at a near-record high.

Featured

$52,500 fine for effluent mismanagement

A Taupiri farming company has been convicted and fined $52,500 in the Hamilton District Court for the unlawful discharge of dairy effluent into the environment.

Ospri brings Bovine TB testing in-house

The move to bring bovine TB testing in-house at Ospri officially started this month, as a team of 37 skilled and experienced technicians begin work with the disease eradication agency.

National

Machinery & Products

Fliegl offers effluent solutions

Founded in Germany as recently as 1977, today, the Fliegl Group employs more than 1100 workers, offering an expansive range…

» Latest Print Issues Online

Milking It

It's all about economics

OPINION: According to media reports, the eye-watering price of butter has prompted Finance Minister Nicola Willis to ask for a…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter