The supply of veterinary medicines and pesticides is secure for the 2021-22 season, but farmers and growers may not find their favourite brand on the shelf. An alternative will be available if the usual choice is not.
The agrichemical market is not experiencing shortages due to efficient management, but freight delays and costs are causing challenges. Agrichemical suppliers need to order months ahead of time to ensure products get to market for the coming year.
Difficulties with sea freight and a spike in airfreight costs are behind the challenges. Extended shipping times and congestion at domestic and international ports is leading to major delays. The shipping lead time that was three months is creeping up to six. Companies are factoring longer lead times for orders to meet demand.
Due to a massive backlog in processing, 240 ships are sitting off the coast of Singapore. More locally, the Auckland Port is overloaded - not aided by the recent cyclone. An Auckland beer festival had to be cancelled due to various beer brands being stuck in the Pacific ocean.
A lack of shipping servicing from New Zealand is stalling exports, leading to products for global supply being backed up for months.
Concern is brewing over whether global customers will question the ‘risk’ of continuing manufacturing from New Zealand if they are having to pay for products they cannot get to market, and the erosion of their margins because of the logistics costs. These costs are becoming prohibitive after several surcharges are added to get containers out of New Zealand.
These costs are also affecting the import of raw materials into New Zealand. Rising product costs are anticipated as freight charges are up by 400 percent or more. This has yet to flow on to the farmer and grower.
Neglecting to address the New Zealand supply chain challenges could leave us behind. Manufacturing and export businesses will be at risk of losing global contracts or be significantly disadvantaged in negotiations for new supply agreements.
Grower confidence has also weakened due to labour shortages, leading to fruit rotting on trees and the flow-on effects of that. The ever-increasing scrutiny of the primary industries - starting from where products are sourced, right through the supply chain to the end consumer is another challenge.
We are in a post-truth era, so opinion and emotion have more influence at all levels. This has an impact on politicians and regulators, so regulatory intervention is a real risk. These all affect the security of supply.
Delays in regulatory processes for registering new products and less commitment to research and development are complicating things further. These interrelated factors are causing uncertainty in the market.