New Zealand food export sector ‘well placed’ to manage coronavirus fallout

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A senior rural economist believes the New Zealand dairy industry and wider food sector is in a stronger position than most to weather the fallout from the coronavirus outbreak.

Global dairy prices have fallen on the back of the coronavirus outbreak, but the lower NZD/USD means that the outlook for farmgate milk prices remained healthy, said ASB senior rural economist, Nathan Penny.

“At our current forecast levels for the milk price, the majority of farmers are likely to remain profitable,” said Penny.

“In addition, Fonterra is reporting early signs of turning its performance around, maintaining its earnings guidance in its half-year results. While still early days for the co-op, the results announced today are an encouraging start.”

“A good example of this is in China where food imports are being fast-tracked for entry via the putting in place of ‘green lanes’ at Chinese ports. Nonetheless, these are unprecedented times.”

Fonterra CEO, Miles Hurrell said there were positive signs that the Chinese market was getting back to normal.

“It’s really pleasing to see some signs of life, out of the food service business with reports of the likes of Starbucks and McDonalds, up to 90 percent of their stores open across China which gives us some confidence,” said Hurrell.

He said the co-op had been working closely with logistic providers and supply chains to ensure there was seamless delivery into markets.

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