NZ Exports and Opportunities: NZ Farmland and Forestry Produce

  • May 20, 2020 NZST
  • Team Kalkine
NZ Exports and Opportunities: NZ Farmland and Forestry Produce

New Zealand’s ardent efforts towards the recovery has not only revived the existing business prospects but has also placed the country at an advantageous spot to leverage its early mover position from the pandemic scenario. The conspicuous efforts involved through the lockdown measures has aided the country to move “Halfway down the Everest” as pointed by PM Jacinda Ardern. New Zealand currently functions in Alert Level 2, where a range of businesses activities have kicked-off.

The Kiwi land jumped through hoops with its swift and effectively placed government measures that successfully ensured the accomplishment of the government’s ‘Elimination Strategy’. In the past few days, the recovery rate has massively outnumbered the growing statistics to the point that the country showed 40 active cases on 19 May 2020 out of the total 1503 cases registered so far. However, director-general of health Ashley Bloomfield concerning the nation’s movement to Alert Level 1 has highlighted “there was still a long way go”.

Amidst the surging economic prospects and intensifying talks of the Trans-Tasman Travel, New Zealand exporters are keenly eyeing the green shoots that could add up to the sales and market growth thick and fast. Meanwhile, NZ forte in the primary industry products is evident across the different parts of the globe through the surging figures in the past couple of years. The Budget 2020 provided green funding worth $1.1 billion for enhancing the job prospects in primary sectors as well as in nature-centric industries. 

ALSO READ: ‘Once in a Lifetime’ Budget 2020

As the nation steadily sails through the crisis, further avenues open for the related products to nurture the NZ export market through the vast sea of international opportunities. Demonstrating the success, NZ exports in March 2020 increased by 3.8% compared to March 2019, with the total exports worth $5.8 Billion. Let us, deep dive, into understanding a similar set of opportunities that the current situation presents to the NZ exporters.

NZ Log Market

China resumed its construction activities which are expected to increase the log demand from one of the largest timber exporters. While the demand during April remained at a record level, the uncertainty in the Chinese market and the increased shipping cost amidst the crisis has pushed the At Wharf Gate (AWG) prices for logs down. 

The lockdown earlier in New Zealand was received with an increased price of the logs in the Chinese market as the builders focussed on the timber availability during the period of supply shortage from the island country. In the domestic market, residential construction last year showed record growth. Meanwhile, the weakened NZ dollar in the past months would strengthen the international buyer’s position to purchase NZ log. 

ALSO READ: Respite for NZ dollar amid easing lockdowns globally

March 2020 saw fall in the export of untreated logs by $173 million as per the NZ government figures. Under the current pandemic it is expected to impact the European Spruce supply as well. Thus, the Chinese log inventory is expected to be lower over time with the supply issues amidst the crisis. Meanwhile, the lifting of the lockdown restrictions has ramped up the wood quantity in New Zealand, through which the exporters expect to leverage the current supply situation in China.

Manuka Honey 

The growing health concerns among Chinese consumers have shifted the consumer’s inclination for immunity-boosting health products. Manuka Honey which is a highly priced commodity and has enjoyed its popularity in the recent years, witnessed high growth potential in China. 

The export upside prospects are further strengthened through the adequate honey harvest in the current year. Manuka Honey market leader, Comvita Limited (NZX: CVT) announced in April that around 95% of the honey extraction has completed signifying the harvest increase of 60% year on year. Additionally, the company also reported improvement in the quality of the crop by 150%. 

Comvita’s double-digit year on year growth and the strong demand in the market quarter typically highlights the growing export opportunities for the Manuka honey producers. UMF Honey Association chief executive John Rawcliffe also highlighted the strong demand among the Chinese consumers for New Zealand’s high-quality Manuka Honey.

Kiwifruit Demand

The horticulture players remained in the vibrant zone as New Zealand’s Kiwifruit exports recorded massive sale during the time of crisis. As per the NZ government export statistics, Kiwifruits exports rose by $105 million from March 2019 to worth $187 million. The growth was supported by the double demand from China.

 

Source: Stats NZ 

Source: Stats NZ

International statistics manager Darren Allan indicated the industry for golden fruit is “expecting a record harvest” which would be bolstered by the strong North Asian demand. The exports season for the kiwifruit lies from March to November. The initial healthy kickstart is expected to provide strong momentum in the coming months. 

Meat and Dairy Products 

New Zealand’s farmland produces despite the Covid-19 lockdown experienced robust demand from the international markets. While the export value of the meat products was up 11%, the dairy product realised the increased demand of 7.6%. 

Meanwhile, the increasing prices of the products contributed to adding the total export value. While the price for the milk powder was up by 33%, sheep meat and beef price rose by 9% and 10% respectively. The stockpiling amidst the lockdown has further positively impacted the sales of the dairy products across the different international markets.

NZ infant formula producer, The a2 Milk Company Limited (NZX: ATM) confirmed the strong revenue growth in the March Quarter. The Chinese exports which are done in US dollars were favourably affected by the depreciation of NZD against USD. 

Bottomline

New Zealand appears to be taking forward its exports, especially in the Chinese mainland that initially kickstarted through the Free Trade Agreement between the two countries in 2008. The current pace at which the primary sector produces are gaining momentum in the country, and the burgeoning opportunities in the international food market are expected to provide strong support to the NZ economy. However, given the current global pandemic situation, the stimulation of the full-fledged export is still awaited by the country. 

 


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