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

Help available for flood-hit farmers

The chair of the Otago Rural Support Trust, Tom Pinckney, says he believes that they will be especially busy in the coming months as the enormity of the floods hit home.

Featured

New ag degrees at Massey

Changing skill demands and new job opportunities in the primary sector have prompted Massey University to create a new degree course and add a significant major into another in 2025.

The show is on!

It was bringing in a new Canterbury A&P Association (CAPA) show board, more in tune with the CAPA general committee, that has ensured that Christchurch will have a show this year, says CAPA general committee president Bryce Murray.

National

'Quite a journey'

Former Synlait chief executive Grant Watson says the past two years have been quite the journey.

DairyNZ levy to increase?

Retiring chair Jim van der Poel has used his final AGM to announce the intention to increase the DairyNZ farmer…

Former Fonterra CEO dies

Former Fonterra chief executive Theo Spierings passed away in the Netherlands over the weekend.

Machinery & Products

Milk Sustainability Centre launched

The recently announced Milk Sustainability Centre – a collaboration between global giant John Deere and milking and feed specialists De…

Data connection made easier

New Holland and Case IH are introducing new advancements in their precision technology stack to make farming easier and more…

» Latest Print Issues Online

Milking It

Feed from farmers

OPINION: The country's dairy farmers will now also have a hand in providing free lunch for schools.

Brighter future

OPINION: The abrupt departure of Synlait chief executive Grant Watson could be a sign that Chinese company Bright Dairy, the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter