China’s growth is a key factor in lifting returns from NZ’s major exports

New Zealand’s producers of  major exports  have  been  earning  the  country record returns   in  foreign  markets.

It’s  the  news which  should  buoy  the whole country after  such a  tough  year.

ANZ’s monthly commodity price index rose 6%  in March on February, and  is 20% higher than a year ago,  to  peak  at its highest point since it was started in 1986.

Standing out has been the strength of global dairy prices, which gained 12.7% in March, the highest in seven years.  Returns  for whole milk powder, a key driver  for Fonterra’s suppliers, were 43%  higher than last year.

ANZ’s agricultural economist Susan Kilsby said:

“Dairy prices are currently being supported by strong global demand, combined with a steady milk supply in the main dairy-exporting nations”.

Meat was close to a one-year high, while logs and aluminium were sitting near two-year highs.

The common feature of the strong prices and demand was China, which was growing more strongly than most economies after the pandemic, Kilsby said.

“It was already a major buyer of our commodities before Covid hit and it’s going to continue to be for the foreseeable future.”

But  not  all  exporters  are  singing   hosanna.

The seafood and horticulture sectors remain under pressure, with the former not  able to sell to normal high end food outlets overseas, and the latter  struggling to harvest crops.

Shipping costs  are still   high  and the shortage of containers is more pronounced with exporters finding it harder to get containers and then space on ships. The Baltic Dry shipping index – a lead indicator of economic activity – rose 25% in March.

As  if  that’s  not  enough, there  are other   burdens  for the  country’s main  export  earners,  particularly labour   shortages.

Apples  are  rotting  on the ground  in   Hawke’s  Bay  because  orchardists  cannot  find the  pickers  they  need. 

Besides fruitgrowers, meat  and  other food processing industries are calling on the government to open Pacific borders to tackle what they’re calling their worst-ever labour crisis.

Radio  NZ  reports  Progessive Meats founder Craig Hickson as  saying his company is short of staff.

“This has been the most difficult and most challenging, worst experience with regard to having sufficient people at work,” he said.

“We in fact have been short of workers right through the peak lamb season which is a little bit longer than the apple season and we still remain short today.”

At the Watties factory in Hastings, agricultural manager Bruce Mckay said he is also facing difficulties.

“We’re having to deal with erratic supply of product coming to the factory,” he said. “We’re having to deal with staff absenteeisms on a grand scale each day.”

The  question   is  why  doesn’t   the  government   open  up  its   borders   to   Pacific  Island  seasonal  workers? These states   have   been  remarkably  free of  the Covid   virus.

National’s Judith Collins  sees  the  RSE workers from the  Pacific as absolutely crucial to the economy   not  just  of  NZ   but to these countries.

 But Prime Minister Jacinda Ardern  argues  it’s   not simply   an   issue  for  NZ.  The other side had to agree.

“Other countries, they’re not even allowing in some cases, their citizens to return, so it’s actually not just a decision for New Zealand, there are many Pacific neighbours who are part of the RSE schemes who do not want open borders at this point.”

Point  of  Order  suggests some  top-level friendly persuasion   might  have  a  more  satisfactory  outcome  for  both   the RSE  workers  and the  industries—not to mention  NZ  as a whole.

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