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Saturday 25 June 2022

Global disruptions mean death of ‘business as usual’ for exporters – B+LNZ

5th May 2021 By Bridget O'Connell | | @foodtickernz

Food exporters have been warned not to fall back on a ‘business as usual’ approach following the disruption Covid-19 caused to world trade – because there is more in the pipeline.

Speaking at the Beef + Lamb New Zealand Conference in Palmerston North during AgriFood Week, trade policy consultant Stephanie Honey forecast continuing turbulence for world trade, which is grappling with issues such as disrupted supply chains, food service channels and Covid protocol management.

“Exporting is critical to the red meat sector, but this is a period of enormous turbulence for world trade,” Honey said.

Stephanie Honey

“The biggest takeaway is that it cannot be business as usual because we are facing a very challenging future picture for trade and exports.”

Honey said there were still longterm risks from Covid disruptions to economies with some countries continuing to battle the pandemic.

“That really matters. Obviously we can be as good as we like at producing high quality products but if our customers don’t have the money to spend we are still going to feel the pinch.”

New Zealand exports 93% of the lamb it produces and 85% of the beef, and around three quarters of these exports are concentrated into five markets comprising China, UK, US, the European Union and Japan.

However, Honey said that while Covid served up challenges, it also helped to illustrate that New Zealand could pivot when necessary.

“The sector’s export profile is fairly narrow which is based on sound business decisions about where and how to get the best returns to put into farmer’s pockets, but increasingly there are conversations around diversification.”

That was especially true when it comes to New Zealand’s reliance on China, which accounts for around 37% of NZ’s exports.

“Even though we are really concentrated we still need optionality in markets. if there is a shock that affects one of our markets, for instance China, we need to be able to diversify if we need to,” Honey said.

“It is true we are very heavily weighted towards China, but equally in the early days of Covid when China was essentially shut, that companies and New Zealand pivoted pretty impressively actually to supply other markets.”

Honey also flagged increasing protectionism and the weakening of the World Trade Organisation as a cause for concern, as well as a ratcheting up of non-trade barriers.

“The goal shouldn’t be to get through the worst of the problems but actually to thrive and deliver a sustainable prosperous future for our communities,” she said.

“We’ve got a very competitive, turbulent, trading environment and challenges abound, but also there are opportunities we can uncover from new free trade agreements, from leveraging our environmental credentials or leveraging our digital capability.”



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