One of the biggest problems Covid-19 is causing New Zealand is that it is preventing politicians and business people from having face-to-face contact with their counterparts in our main markets.
Mike Petersen, a former New Zealand agricultural trade envoy and director of a number of New Zealand agriculture-related businesses, believes face-to-face contact is what rocks the talks. He says it was evident last year when Trade and Exports Minister Damien O’Connor and MFAT chief trade negotiator Vangelis Vitalis visited Europe and saw them strike a tentative deal. on the free trade agreement (FTA) with Great Britain.
Petersen says a major priority for New Zealand in 2022 is to lock in the FTA with the EU.
“But it’s going to be incredibly difficult with the French elections in April and, of course, agriculture being so sensitive there,” he said. Rural News.
“We are going to fight until the end of the French elections and then who knows what kind of government France will have after that. We have been talking about this for a long time and we have to make sure that we have Europe on our side because the 27 Nations are incredibly valuable to us with many of our products excluded from this market, including dairy products.”
According to Petersen, while politicians are important in pushing FTAs through, these deals also require business-to-business contacts because often the pressure does not come from politicians, but from people on the ground. He says business and the private sector can play a very important role in this regard.
“And right now it’s almost impossible and we’ve been out of the market for two years now,” he says.
Petersen says business people are frustrated at not being able to go overseas and the goodwill that has built up over the years is starting to fade. He says this is often due to staff changes in New Zealand and overseas.
“It’s a real concern. It’s like credit in the bank, it lasts a good while, but it gradually erodes over time.”
He cites China as a case in point. Petersen says that before Covid there was a lot of face-to-face contact with Chinese politicians and business people, which resulted in a lot of credit being accumulated. But he points out that there hasn’t been a trip for two years and, in the case of China in particular, the face-to-face contact is what counts.
“Dodging and diving” are chargeable
Meanwhile, Petersen says demand and prices for all New Zealand primary commodities look good and that is positive for the country in the year ahead.
He believes this is largely down to exporters deserving huge credit for the returns they have been able to get from the market despite Covid. He says they’ve been ‘dodging and diving’ around the world trying to navigate an incredibly difficult world with Covid.
“They’ve been surprisingly successful in getting high prices, which at this point has more than offset the cost pressures that are being felt,” Petersen said. Rural News.
But he says bringing the product to market and getting the same good prices with Omicron will be the biggest challenge for 2022 and will dominate thinking in the primary sector.
“I think it will be a permanent problem in 2022 and some commentators are saying it will get worse.”
Petersen says rising air and ocean freight costs and unreliable shipping schedules have hurt the export of many value-added items — like some chilled meats. He says some exporters are starting to ship frozen goods again to avoid the risk of them not reaching their destination in time. He adds that this is compounded by a labor shortage in New Zealand, which means there aren’t the staff needed to produce value-added products here.
“People are now starting to commoditize and do less value addition here in New Zealand, which is not what we want,” adds Petersen.
“Actually, we want to go the other way, but the reality is that some of that added value will be created overseas. But even then there are problems because most markets in world are constrained by a lack of labor – so it’s not just a New Zealand problem, it affects other people around the world as well.”
Petersen says he detects an air of nervousness in the primary sector with exporters not sure where things will land in the coming year. He says that even though there are predictions of good returns, people are worried about the future.