Coronavirus: Report highlights hit to agriculture sector

The hit to the New Zealand farming and agriculture sector by the coronavirus outbreak has been highlighted in a new report, which predicts export revenue losses across most industries.

The latest Situation Outlook for Primary Industries (SOPI) report from MPI forecasts primary sector revenue will rise 0.5 percent in the year to June 2020 to $46.5 billion.

However, it forecasts losses across a number of industries, due to the impact of coronavirus.

Forestry export revenue is the worst affected and is forecast to fall by 17.9 percent in revenue to $5.65 billion.

The drop was due to over-capacity in log inventories at Chinese ports caused by COVID-19, and oversupply from markets such as Europe, the report said.

Seafood export revenue was also expected to fall due to COVID-19, where New Zealand rock lobster exports had taken a hit.  

A 2.2 percent fall in revenue to $1.92 billion for seafood exports was forecast which was on the back of the 10 percent growth in export revenue the previous year.

Damien O'Connor aid the Government was closely monitoring the situation the sector is facing
Damien O'Connor aid the Government was closely monitoring the situation the sector is facing Photo credit: Newshub

Dairy export revenue was forecast to rise 6.3 percent to $19.2 billion, driven by strong domestic production and favourable export prices to December.  

However, while overall dairy export revenue is forecast to grow, the forecast had reduced by $390 million due to weakened international dairy prices in the wake of COVID-19, and expected lower production due to hot and dry conditions across the country.

The report forecast meat and wool exports to rise 0.3 percent on the previous year to reach $10.2 billion, taking into account a reduction of $220 million due to reduced demand from China caused by COVID-19.

The longer-term outlook for meat exports was bright, particularly in beef and veal which was forecast to hit $3.4 billion in the year ending 30 June 2020, 2.6 percent on the previous year.

Horticulture continued to be one of the star performers, with export revenue expected to rise 2.9 percent in the year ending 30 June 2020, hitting $6.3 billion.  

The growth was driven by strong performance in kiwifruit, apples and pears.

Agriculture Minister Damien O'Connor said the sector was showing its underlying strength and resilience despite the challenges.

"We saw strong performance across most of our primary industry exports in the first six months of the year, mostly as a result of growing demand and good prices in dairy, red meat and horticulture," said O'Connor.

He said the Government was closely monitoring the situation the sector is facing and working with industry leaders to ensure New Zealand's high-quality products continue to get to market despite the global trade issues created by COVID-19. 

"While our forecasts show export revenue will take a number of short term hits, demand for New Zealand food and fibre products should continue to be strong in the longer term.

 "There are still some good prices, compared to previous years, for many of our products, including dairy. The predicted growth in this sector in the face of current challenges is a credit to everyone's hard work and shows how people are calmly working through things."