Tuesday, 10 March 2020 10:19

Full impacts not felt yet

Written by  David Anderson
Rabobank estimates that around 15% of all products coming off NZ farms are now being shipped to China. Rabobank estimates that around 15% of all products coming off NZ farms are now being shipped to China.

Rabobank says NZ’s food and agri sector’s heavy exposure to China has been magnified by the coronavirus outbreak.

In its March Agribusiness Monthly Report, the specialist rural banker says that in 2019, 31% of the sector’s exports by value were destined for China. 

Rabobank estimates that around 15% of all products coming off NZ farms are now being shipped to China. It points out that NZ beef, sheepmeat and cheese products are especially exposed to the Chinese foodservice industry.

“Secondary markets exist for NZ products outside of China, but usually they pay less for products typically shipped to China,” the report says.

It says, in the last week of February, anecdotal evidence suggested that logistics were improving in China.  However, the bank warns that any reacceleration of infection rates in China would set any recovery back significantly.

In late February, coronavirus made its first appearance in a wide range of countries and gained a significant foothold in South Korea, Iran, and Italy.

“Clearly, its impacts will be worse if coronavirus gains a foothold in NZ’s other important export markets and globally important economies, like Japan and the US,” Rabobank adds.

It says the impact of coronavirus will also depend on how China fares. 

“If the virus is contained in China, the NZ food and agri industry will be better placed to weather the storm of its spread to other markets.”

Meanwhile, bank suggests the sector is likely to gain some offset to the virus’s spread via exchange rates. 

“The worse the virus gets, the lower the New Zealand dollar will fall,” the report concludes. 

“Other market developments may help reduce the impact of the virus on some commodities. But the industry cannot hope to avoid lower pricing and a slowdown in sales if a pandemic ensues.”

More like this

Bank loans are falling

There have been some encouraging signs for dairy farmers recently, says Rabobank national manager for food and agribusiness banking, Hamish Midgley.

Featured

 

Change of tune needed

OPINION: It has been some weeks since we have had to face the ideological rhetoric, in any quantity, that has pervaded our lives for much of the last three years – and I haven’t missed it one bit!

Farmers adapt well to new sales model

Fonterra’s rural service subsidiary, Farm Source says farmer shareholders are adapting well to its new trading model under COVID-19 restrictions. 

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Flying high

This old mutt would like to know how the sanctimonious Green Party and its MPs can continue to lecture everyone…

Put it down

Your canine crusader notes that the woke folk at Landcorp – sorry Pāmu – were recently crowing about recording a…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter

Popular Reads

Rules driving farmers out

New farming rules around sustainability are driving elderly farmers out of the dairy industry, says agri-economist Phil Journeaux.