Labour ministers are beating the farming drum (as never before).
On stage at the Fieldays at Mystery Creek, one of the first out of the block (given the absence of Agriculture Minister Damien O’Connor negotiating free trade in London with the UK) was Oceans and Fisheries Minister David Parker.
He was singing the praises of the sector, which might have come as a surprise to many within the farming industry, who have found the strictures he has delivered from his Environment portfolio rather hard to digest.
Parker used the Fieldays platform to talk up the sector which he declared had performed remarkably well in the face of Covid-19.
“NZ’s farmers, growers, fishers, processors, makers, and crafters have risen to the challenges that 2021 has presented”.
Farming exports are forecast to hit a record $49.1bn, up 3.4% over the next year, and The Situation and Outlook for Primary Industries report says by June 2025 the sector’s exports are forecast to reach $53.1bn.
This follows a 1.1% dip in total food and fibre exports for the year ending June 30.
The report shows the horticultural sector in particular had performed well. Its export revenue was forecast to hit $6.6bn, up 2.3%, by June 30. The rise has been driven by larger crops and export volumes of kiwifruit and avocados, as well as continued overseas demand for fresh fruit and wine.
Parker said challenges arising from the pandemic, including food service disruptions and shipping logistics, have been felt across several sectors with the seafood sector hit harder than most.
He said that while the effects of Covid-19 would continue for some time, including labour shortages, work was under way to bridge the gap, including the Opportunity Grows Here campaign, to attract New Zealanders to food and fibre sector jobs.
Demand did slow considerably during the pandemic, but export volumes and prices for products such as rock lobster are recovering well. The sector has done well to navigate the challenges of the past year.
Forestry Minister Stuart Nash said the update showed the demand for dairy and forestry exports was bouncing back better than expected.
Forestry revenue was expected to reach $6.3bn this year, an increase of nearly 13%, due to higher export volumes and prices.
Export volumes of logs were also set to increase by 21.4%, attesting to the sector’s resilience, Nash said.
Forestry would also benefit from the upgraded free trade agreement with China, signed in January, which eliminated tariffs for 99% of NZ’s nearly $3.3bn wood and paper trade to China.
To reinforce the message of the ministers, Point of Order records the latest Fonterra GDT auction has been seen in some quarters as a soft one, falling for the sixth time in the past seven events with a 1.3% decline. But this time there is kind of a silver lining because the NZD is at a two month low, so in NZ dollars the overall price rose +0.6%. Moreover the auction shows demand from food service businesses returning.
While milk powders and milk fats prices were down, anhydrous milk fat (AMF) made a small gain of 0.6% to US$5600 a tonne. AMF is used widely in the food service sector, and had become a little more profitable than butter for Oceania processors.
Prices for AMF had lifted across most contract periods, but were strongest for products due to be shipped in July, which were up 4.3%.
It has become more noticeable over the last few events that food service demand was picking up.
Despite milk powders falling in price , they continue to sit at relatively high levels. Whole milk powder prices eased to under US$4000 a tonne (NZ$5600) for the first time since March, which could increase demand from price-sensitive buyers outside of North Asia, she said.
The WMP prices had not moved less than 1% for the last five events.
The upcoming Fonterra milk price forecast is likely to sit around $8kg/MS.