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.