May 10, 2022
COVID-19, supply chain issues create volatility challenges for New Zealand's beef
Inflation in the United States, COVID-19 lockdowns and supply chain woes in China meant volatility will continue to put pressure on New Zealand beef to those key markets, Rabobank said.
Rabobank's May report, "Global supply chain mayhem", said despite high demand, exports of local beef to China was down 10% on year-on-year in March. In the same month, beef exports to the US were down 18%.
Global exports volumes of New Zealand beef were also down 11% in March compared to a year ago, but total beef earnings was up 27% . This increase in earnings was due to high prices, the report said.
Genevieve Steven, agriculture analyst at Rabobank, said that in 2021, China was New Zealand's main market for beef. The US was the second-largest market for the meat.
Meanwhile, fresh COVID-19 lockdowns in the Chinese cities of Shanghai and Beijing meant consumers could not visit restaurants or had difficulty accessing supermarkets. This kept consumption low, Steven said.
Even if lockdowns were eased, there would still be pressure on exports as supply chains were congested and struggled to deliver to markets, she said.
Long term volumes of beef to China would probably continue to be low, but prices would remain supported as there were limited global beef supplies, she said.
The US experienced a 20-year low in beef production, with Australia recovering from a similar production shortage. This created a low supply of beef in the global market, which supported local export and farm gate prices, Steven said.
New Zealand exporters had enjoyed incredible stability for the past five years, but current volatility could take several years to stabilise, she added.