Global Dairy Trade auction expected to reveal early impacts of US trade war, Associate Health Minister hits the road to hear rural health concerns, and critical foot and mouth vote opens this week.
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Global Dairy Trade auction expected to reveal early impacts of US trade war
This week's Global Dairy Trade auction will be closely watched as the first major test of how Donald Trump's tariff moves might impact dairy prices. With nearly two weeks passing since the US President imposed a wide range of tariffs sending markets into turmoil, New Zealand's dairy sector is particularly concerned about effects on China, our largest dairy buyer.
A Chinese dairy industry source indicates that while general demand might remain stable, the greater concern is the potential pressure on Chinese consumer confidence if trade tensions continue. Chinese leadership is reportedly meeting to devise plans to boost their economy and stabilise markets in response to the situation.
New Zealand exported $980 million worth of dairy products to the United States in the year to December, with most of Fonterra's US business focused on value-added protein ingredients including caseins and various protein concentrates. The average US tariff on dairy products was already 19.6% before the recent changes.
Fonterra is currently working to understand the direct impact of the 10% tariffs on their business, including determining exactly who pays the tariff in each case and how it affects customer relationships.
Southland's diverse export mix provides buffer against US tariffs
Southland exporters are adopting a measured approach to the United States' new tariff regime, with many businesses confident the region faces less exposure than other parts of New Zealand.
Export Southland chairman Jamie May highlights that only a small portion of the region's container trade heads to American markets. While dairy products, meat, pebbles, pet food, processed forestry products and aluminium make up the main exports to the US, these represent relatively small volumes of Southland's overall export portfolio.
The greater concern for local exporters centers on potential secondary effects - whether tariff-driven inflation might trigger broader economic slowdowns across New Zealand's trading partners. Some shipping companies are hesitant about having products already en route to the US that could suddenly face changed conditions. However, May notes the disruption could create opportunities for Southland if American buyers shift away from heavily tariffed competing nations.
The timber sector appears particularly insulated, with companies like Niagara continuing normal operations. The industry has largely avoided tariff impacts, likely due to America's limited domestic timber manufacturing capacity.
Alliance Group reports steady buyer interest despite the uncertainty, with American beef demand remaining robust due to domestic shortages. The company is monitoring potential market shifts but currently maintains strong sales momentum.
Fonterra, which primarily exports specialized dairy protein ingredients to the US, emphasizes the importance of maintaining the international rules-based trading system during this period of heightened protectionism. The company's protein concentrates and casein products supply American manufacturers of nutritional products for both domestic and global markets.
Associate Health Minister hits the road to hear rural health concerns
Associate Health Minister Matt Doocey is launching a Rural Health Roadshow to hear directly from rural communities about their healthcare access and needs. Starting this week in Levin, the tour will visit 12 rural locations across New Zealand.
Doocey, who holds responsibility for Rural Health and Mental Health, says the government is committed to improving health outcomes for the one in five Kiwis living in rural communities. The roadshow aims to gather feedback on the implementation of the Rural Health Strategy published in 2023.
The Minister wants to hear from both rural residents accessing health services and those working in rural healthcare about what's working well and what needs improvement. Access to care remains a key challenge for many rural communities.
Several initiatives are already underway to address rural health needs. The government recently provided accreditation to Te Tai o Poutini West Coast to deliver Australian College of Rural and Remote Medicine training and awarded scholarships to 27 healthcare students to boost the future rural workforce.
Other improvements include increased access to primary care with 24/7 digital options, training more doctors, and investing in rural nursing with up to $20,000 available per nurse employed in rural areas. Doocey adds that rural communities are being prioritised in Health New Zealand's rollout of Integrated Primary Mental Health and Addiction Services across more than 400 general practices.
Rabobank predicts continued high fertiliser costs for farmers
Fragile global urea supplies are creating price volatility for New Zealand farmers, with several key suppliers exporting lower volumes year-on-year according to a new Rabobank report. The bank's research shows this supply constraint is causing a ripple effect for New Zealand fertiliser importers.
Urea represents nearly a third of New Zealand's total fertiliser imports, with the country particularly sensitive to global market conditions due to minimal domestic production. Rabobank farm-inputs analyst Paul Joules says the market will likely remain volatile due to complex supply chains and geopolitical influences.
Current urea prices are trading around the five-year average, but sit 45% higher than pre-Russia-Ukraine war levels. The sensitivity of natural gas markets, which provide the predominant feedstock for urea production, adds to price volatility.
While New Zealand sources most of its urea from Saudi Arabia, Malaysia and Vietnam, supply issues in major producing regions including Europe, Iran, Egypt and China still impact global availability and influence prices for Kiwi importers.
Critical foot and mouth vote opens this week
Beef and Lamb New Zealand is asking farmers to vote on joining the foot and mouth disease Operational Agreement between Government and the agriculture sector, with information packs heading to mailboxes this week. The agreement formalises how the industry would respond to an outbreak and sets cost-sharing arrangements between Government and primary sectors.
Recent foot and mouth outbreaks in Germany, Hungary, Slovakia and Indonesia highlight the ongoing threat to New Zealand agriculture. While keeping the disease out remains the top priority, B+LNZ has been working with Government and industry partners on response planning through the Government Industry Agreement for Biosecurity Readiness and Response that farmers approved joining in 2018.
The potential financial liability makes this a major transaction under the Companies Act, requiring formal farmer approval before B+LNZ can sign. Information packs including unique voting credentials will be mailed from today, with online voting open until May 16 at 2pm.
B+LNZ emphasises farmers won't face immediate costs if they vote yes. Initial readiness activities will be funded through GIA levy funds collected for M. bovis that aren't needed for historic compensation claims, followed by NZ Meat Board reserves earmarked for industry-good activities. If an outbreak occurs, Government would fund the immediate response and recover costs through increased levies starting one year after trade resumes, spread over a decade.
Importantly, voting no doesn't mean avoiding costs in an outbreak scenario, but voting yes secures farmers a direct say in response decision-making and how industry contributions are managed. The agreement has broad support across agricultural sectors and would take effect from July 1 if approved.
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