Although the movement of people across the globe has come to a near standstill, New Zealand’s exports mean that we still have a large connection to the outside world. Revenue from goods exports are income for many New Zealanders and have thankfully been quite resilient to the effects of COVID-19. It’s hard finding cheerful good news stories during a global pandemic and subsequent global recession.
But in every large disaster people find opportunities, whether through luck or enterprise. Some of our goods exporters have fallen into this category and by highlighting these bright spots, hopefully more New Zealanders also see opportunities and turn their fortunes around.
Trade: our saving grace
The latest provisional trade data from Stats NZ shows goods exports were up 0.7%pa over the period from the start of February to 9 September, despite almost every country having some sort of restrictions because of COVID-19. Having our exports heavily weighted towards primary industries and food production has been our saving grace.
Exporters targeting supermarkets have seen stable if not elevated demand, such as dairy and meat, up 7.6%pa and 2.5%pa, respectively since February (see Chart 1). Our wine exports have also maintained recent momentum, growing 8.5%pa over the year to July.
Meanwhile, food exports primarily destined for restaurants have suffered. For example, live exports of rock lobster, typically supplying high-end restaurants in Asia via airfreight, are down 40%pa for the period February to July.
Hoarding of healthy products
Some of our health and lifestyle-related food products have even benefitted from the global health crisis. Globally, a move to boosting immune systems to prevent illness and a focus on home remedies has aided the trade of some goods. Exports of honey products, dominated by manuka honey (90% of total honey exports in 2019) which is known for its anti-microbial properties, have skyrocketed since the outbreak of COVID-19 (see Chart 2).
Manuka honey exports can be quite clearly linked to overseas lockdowns. The initial growth in manuka honey exports in February was preluded by demand from China (the first country into lockdown), followed by the rest of the world as lockdown restrictions became widespread. New Zealand’s fruit exports have also done well in 2020. Kiwifruit exports are up 19%pa in the year to July and apple exports are up 4.5%pa over the same period, as healthy food consumption has risen.
Changing habits or just a phase?
Will the increased demand for New Zealand exports persist when this pandemic is over? Some of the additional demand is likely to be temporary, such as the recent spike in meat exports going to the USA because of the many meat works that had to shut down or reduce capacity due to large COVID-19 outbreaks.
Other trends may be more permanent as overseas buyers become more aware of products that New Zealand supplies. As a developed nation, our reliance on the primary food sector is unusual but as we have been reminded recently, it’s a safe option.
The world will always need to eat. Identifying what markets have done well during a time of crisis is important. Although COVID-19 has shut many doors, others have opened, it’s just a matter of finding them.
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