Catherine Beard finds good reason for optimism amongst the fallout from the Covid-19 situation.
New Zealand’s primary sector exports have been performing solidly throughout the Covid period. While exports to the EU and UK have fallen and results from the US and Canada are mixed, exports to Asian destinations have grown, some significantly.
At the time of writing, the latest data (for May 7th to 20th) shows New Zealand exports overall are actually one percent higher than for the same period last year.
These results, particularly in dairy, horticulture, meat and wine, demonstrate the strength of this country’s primary produce sector.
Large commodity-focused exporters have had a better time than businesses selling food into a food service channel (restaurants, hotels etc.) – and branded product that can sell into supermarkets has done a lot better than products such as non-branded apples that would sell in so-called “wet markets” or farmers markets, due to the latter being closed down.
While freight and logistics were heavily disrupted at the beginning of Covid-19, seafreight has proved to be very resilient once the workforce got back to work in places like China and the US.
Airfreight capacity has been very limited and very expensive and despite the New Zealand Government supporting chartered flights, those charges are not expected to normalise until passengers are back on planes, as they effectively cross-subsidise the airfreight.
Luckily around 98 percent of goods exported from New Zealand go via seafreight and for those businesses that were relying on air cargo, they are revising their strategies. And the sort of “just in time” ordering that was the norm is having to change.
“Exporters tend to be more resilient and more productive than firms that only sell domestically, and we have heard many stories of how they have pivoted their business to adapt to the post-Covid-19 world.”
Exporters tend to be more resilient and more productive than firms that only sell domestically, and we have heard many stories of how they have pivoted their business to adapt to the post-Covid-19 world we are living in. Firms are looking at increasing their productivity, increasing the speed of their innovation (faster prototyping), using digital channels to customers more, building brands, diversifying markets and looking to add extra income streams (‘servitisation’ of manufacturing).
Exporters are telling us that they have made full use of technology to stay close to their customers in overseas markets. Many have been pleasantly surprised and anticipate that their travel budgets in the future may be a lot smaller than in the past.
Having said that we are also hearing from services exporters and some of our manufacturing exporters that the pipeline of new business that came from attending international trade shows and events will be constrained for some time, so the lack of the ability to travel raises some concerns about future orders.
A call for strategies
Export earnings from tourism and international students have been hard hit by Covid-19 and these are sectors that the Government will need specific strategies for.
The move to Level 1 by New Zealand will potentially make New Zealand an attractive place to visit and to study, but we will need very smart borders to ensure we don’t lose the gains we have made in stamping out the disease.
Overall, I am confident in our exporters’ ability to be resourceful and creative in the face of all these challenges and to find some upside from the crisis.
Those export businesses that can survive this challenge will be more resilient than ever before and hopefully, as a country, the economic shock will not be too deep or too long.
Catherine Beard is executive director of ExportNZ and ManufacturingNZ, divisions of BusinessNZ, New Zealand’s largest advocacy body. Email [email protected]
