Farming in good shape to withstand Covid-19

Long queues outside hot pot restaurants in China as it begins to reopen after the coronavirus lockdown bode well for New Zealand beef, mutton and lamb producers, the meat industry says.

And while bank economists agree farming is well placed to weather the expected global recession, some in the agri-sectors are better placed than others.

As outbreaks affect more countries products like sauvignon blanc, apples and kiwifruit could be viewed by consumers as unnecessary luxuries, ASB economists say in a recent report.

But people need to eat and as such a base level of demand would afford farmers some protection. However, delays and extra costs in processing and shipping would probably affect trade for the time being, the economists said.

China and other Asian economies are beginning to recover, the report says.

In an analysis of Chinese social media undertaken since January, New Zealand Beef and Lamb looked at consumer perceptions of the meat market, country of origin and changes in the retail landscape.

As China recovered consumers were returning to meat, with New Zealand beef and mutton well placed to capitalise.

Spokesman Nick Beeby said beef was discussed the most online due to perceptions of its health benefits. Health had become a strong driver of Chinese buying decisions, which were now more focussed on immunity with natural and organic products faring well, he said.

Chinese were showing a preference for online shopping and New Zealand products were highly rated on sites such as Jd.com, he said. As restaurants began to reopen there had been long queues at shops selling lamb and mutton hot pot, Beef and Lamb global market intelligence and research manager, Hugh Good said.

Rabobank said in a commodity report that New Zealand mutton prices had lifted in March as Chinese buyers returned.

However, the report said global demand would continue to weaken as the rest of the world fell ill, which would reduce consumer spending.

Rabobank NZ chief executive Todd Charteris said farmers were well placed to weather the storm and would shoulder the country’s economic and social recovery.

The outlook for agriculture was positive despite lower confidence among farmers, he said.

A Rabobank survey found farmer confidence fell to negative 44 per cent in the March quarter, down from negative 12 per cent in the December quarter. The majority of farmers were also expecting conditions to worsen over the next year, citing Covid-19 as their main concern.

The drop in demand from China during the survey period, from March 3 to March 18, was probably behind the dim views held by farmers, along with the potential for the same to happen in other key markets, Charteris said.

Horticulturalists were the most upbeat about their own business performance for the year ahead, with 24 per cent expecting conditions to improve, he said. Sheep and beef farmers’ confidence in their businesses had dropped the most, from 16 per cent to negative 40 per cent, and dairy fell from 4 per cent to negative 26 per cent.

Covid19 had also had a detrimental effect on farmers’ investment intentions, he said. ‘‘New Zealand’s rural sector entered the Covid-19 crisis in relatively good shape, with strong commodity prices, low interest rates and a competitive kiwi dollar. We should also remember that New Zealand farmers and growers are among the most efficient food producers in the world and this means they are better placed than most to deal with the impacts stemming from the Covid-19 outbreak.’’