INTEREST
Primary sector in positive place With the farming year winding down, crops harvested, livestock sold, cows dried off and fruit picked, farmers and growers can take a well-earned break. That should also be accompanied by a long sigh of relief enduring a season spanning one of the biggest crises the world has ever faced, while their role in our economy is more viable and valued than ever before. WORDS BY RICHARD RENNIE
The April ANZ commodity report describes a “sky high” index that surged 6.1% over March, putting it at the highest point it has been in the index’s almost 30-year lifetime. The report’s upward drive has been underpinned by dairy’s surge of 12.7% in March alone which has put the sector at the highest level of returns for seven years. Whole milk powder which comprises almost 60% of New Zealand ’s dairy earnings is an eye watering 43% higher than a year ago just as the world was poised to enter assorted levels of covid lockdown. Similar strong gains were also experienced with skim milk powder and butter. The meat and fibre sector has also had a 6% lift on a year ago, despite the intense competition now coming in from the likes of South American countries pushing harder into New Zealand ’s large beef market in China. 40
RE AL FARM E R
Lamb is also finding a firm footing, with a lift of 2%, and hopes are this sector will continue to lift as more restaurants and food outlets start to reopen throughout Europe. Wool which has had such a dire run over the past year is also showing signs of life, with a respectable 10% lift in March – however it has some way to go for farmers to know it can contribute positively to their bottom line, with shearing costs still exceeding the value of the wool harvested. China’s appetite for animal protein has resurged after the country successfully grappled with covid, with an economy that was the only one last year to exhibit positive growth and continuing issues over pork supply lingering due to African Swine Fever decimating pig populations. While the latest outbreak is smaller than two years ago, it is combined with an effort in
China to rebuild pig populations, meaning less product is available for consumption until that is achieved. Interestingly, the red meat sector has also been buoyed by a return to an old school trading option – whole frozen carcases. This form of export has been rekindled in a market that has grown more accustomed to exporting value add portions and cuts over the years, to the extent carcases only formed about 2% of total lamb exports. But the impact of covid on restaurants in Europe, a key speciality cut market, and problems of labour shortages for producing such labour-intensive cuts has made carcass exports to China more appealing. Analysts caution however that carcass sales have a very erratic history and can be a risky market to stake too much upon.
