Minister of agriculture Damien O'Connor has been has warned that the primary sector faces strong headwinds as the impact of Covid-19 lingers on into coming years.
Agriculture withstood the impact of Covid-19 better than most sectors, and enjoyed growth of 4.6 percent annually between 2010 and 2020 (file image). Photo: 123rf.com
In its traditional briefing to the incoming minister, the Ministry for Primary Industries said the global economy was forecast to decline by 4.4 percent this year.
Although agriculture withstood the impact of Covid-19 better than most sectors and enjoyed growth of 4.6 percent annually between 2010 and 2020, it would be exposed to weak demand from a nervous world economy, and some sectors were likely to struggle financially.
This problem would be especially severe as governments around the world eased back on fiscal and monetary stimulation, thereby reducing the buffer between ordinary businesses and general economic conditions.
In New Zealand, about $70 billion has been spent so far on government or Reserve Bank special programmes, such as quantitative easing.
The briefing re-iterated the usual concerns about worker shortages for summer harvests, but it also suggested that better wages paid by growers and others could ease this problem.
It also suggested support for more water storage schemes as climate change makes farming harder.
The briefing document said 85 percent of New Zealand's agricultural output was exported, and this provided 70 percent of all goods exports receipts.
Despite a number of trade agreements, exporting was still not plain sailing and trade barriers and distortions such as tariffs cost New Zealand between $10bn and $15bn a year in pre-Covid-19 figures.
The briefing went on to praise farmers for their work in improving their environmental footprint, especially in the past three years, but it said a lot more work was still needed.
It added a caution - implementing the government's fresh water reforms could take a generation and require sustained focus and effort.