Tourism reset could hurt agricultural exporters

The government’s proposal to reduce the number of future international tourist visitors after Covid-19 to focus on higher-spending visitors may solve one problem but create others, according to researchers at the University of Lincoln.

Research by Dr Rob Radics, Dr Muhammad Umar and Associate Professor Anthony Brien has highlighted that most of our agricultural produce delivered fresh to market is carried on passenger planes and tourists contribute to the cost.

The decline in the number of tourists could drive up transport costs to the point that some companies do not export at all and go bankrupt.

Their work showed that before the Covid-19 hit, there were 550 international flights to and from New Zealand each week, which carried 80% of New Zealand’s global export air cargo in their bunkers, and that it was worth $ 10.8 billion in December 2019.

Only 20% of New Zealand’s air freight was carried by freighters dedicated exclusively to air freight.

Before Covid-19, air freight accounted for less than 1% of New Zealand’s total trade by volume, but around 16% in terms of dollar value.

The report stressed that the decision can only show a lack of understanding of the interdependence of industries.

“What Covid-19 has highlighted is the previously unrecognized symbiotic relationship of certain sectors of New Zealand’s agriculture and tourism industry.”

Transportation costs have already increased due to reduced flights, as in March 2020, Covid-19 halted tourism and reduced air cargo capacity.

This resulted in an immediate increase in competition for cargo space and the government stepped in to fund additional dedicated air cargo flights to ensure the export of perishable goods.

It initially funded 53 weekly flights to major export markets. By November 2020, air freight flights (dedicated cargo and empty flights) have increased to 120 per week; however, export freight costs have also increased, with producers competing for space on flights.

The main categories of products transported by air are fish and shellfish, followed by meat, fruits, dairy products and vegetables.

“The general consensus of the seafood industry is that once the IAFCS government (funding) stops, some products currently exported will be withdrawn from the export market, resulting in a significant reduction in production or the complete shutdown of some businesses. A similar result would exist if flights were reduced as part of a strategic reduction in tourism. “

The research report also said the government had not indicated how it would achieve the tourism overhaul to target high-value tourists and the subsequent restriction of people coming to New Zealand.

“In addition, there has been no discussion with major air freight agricultural export companies about the impact this might have on their products.”

He also said that the aid to exporters itself had problems.

“In the long run, this could be seen as a form of subsidy and a violation of free trade agreements. Moreover, government aid helps only one sector in exporting countries, a bias, and aid cannot continue indefinitely.

While he viewed the effects as unintended on the government’s part, he said reducing passenger flights would reduce export volumes, increase costs and reduce New Zealand’s competitiveness.

He rejected the increase in dedicated air cargo ships, to close the reduced passenger flight gap.

“While this is a possibility, the seasonal nature of the four products used in this research, which are significant users of air cargo, would pose challenges for a consistent and sustainable air cargo service – yet another challenge in the business chain. ‘supply.”

In addition, increasing cargo flights just to compensate for a reduction in passenger flights would not alleviate global problems related to the increase in CO2 from aircraft.

“Therefore, for New Zealand to move forward, it must balance its desire to maintain and increase its exportable perishable agro-fresh products, its desire for sustainable tourism and its consideration of global emissions, while not violating no trade agreement. Such challenges require constant attention from all players in the global supply chain.

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