Just when farming looked set for a great year the country was hit with drought, floods and the fallout from the coronavirus.
The coronavirus outbreak shows how vulnerable New Zealand is with its reliance on China.
Containers sat on wharves in China meaning empty containers weren’t coming back to NZ to be filled. Meat was diverted to other markets but there were limited options for mutton as China was the main market.
Other primary sectors were affected especially forestry and tourism.
The Government was late in reacting but right to place a travel ban. It was appalling to hear the Chinese ambassador criticising the NZ Government for wanting to protect its citizens.
Even now the full extent of the coronavirus outbreak is not known. As we went to print there were still 2000 new cases a day and 2000 dead. So it is prudent to keep the ban in place, even if it stopped students and tourists coming into NZ.
Hopefully the virus will be controlled quickly and people stop dying.
If it is not controlled quickly it could have a greater impact than Britain joining the European Common Market in the 1970s. NZ exports are far more diversified now, but about 30% goes to China. In 2018 NZ exports to China were worth $13 billion and services another $3 billion.
A positive is that the outlook for meat and milk prices still remain strong for the next few years.
Farmers need good returns to weather Government environmental legislation, droughts, floods, Mycoplasma bovis and other unforeseen events.
On top of all these banks have tightened up farm lending.
In the past, farmers could ask banks for money and expect to be given it. Now banks are accused of putting profit margins before the long-term recovery of a farm business.
Farmers are finding it hard to get finance, but those with a good business plan and cashflow are likely to be supported.
Banks are demanding greater debt repayment. This is prudent while the prices are good and farmers can afford to do so. Farm business will be in a position to be supported when farmgate prices fall.
Correction: In the February editor’s note the word ‘long’ was missed out. It should have read: Methane is part of a closed system. It does not hang around for long, 10-12 years…
