1 00:00:00,280 --> 00:00:02,800 Speaker 1: First up. Though demand for burger meat has fueled our 2 00:00:02,840 --> 00:00:06,119 Speaker 1: exports to the United States. The US became New Zealand's 3 00:00:06,160 --> 00:00:09,079 Speaker 1: second largest export market last year. This is according to 4 00:00:09,119 --> 00:00:11,160 Speaker 1: Stats and Z data that came out today. It means 5 00:00:11,160 --> 00:00:14,640 Speaker 1: that Australia has taken a slide from second to third. 6 00:00:15,200 --> 00:00:18,120 Speaker 1: A Z economist Henry Russell is would mean tonight, Henry, 7 00:00:18,160 --> 00:00:18,919 Speaker 1: good evening. 8 00:00:19,480 --> 00:00:20,040 Speaker 2: Good evening. 9 00:00:20,840 --> 00:00:23,040 Speaker 1: Why is the US so keen on our burger meat? 10 00:00:24,400 --> 00:00:27,920 Speaker 2: Well, it's very much a tight supply story over there. 11 00:00:27,960 --> 00:00:31,320 Speaker 2: So the US beef inventory has been in steady declined 12 00:00:31,360 --> 00:00:33,360 Speaker 2: for the past few years and has actually at the 13 00:00:33,400 --> 00:00:36,800 Speaker 2: lowest level in over seventy years currently, and so that's 14 00:00:36,800 --> 00:00:39,320 Speaker 2: been a particularly good news story for our exporters, and 15 00:00:39,479 --> 00:00:42,319 Speaker 2: particularly given it's come at a time where demand from 16 00:00:42,479 --> 00:00:45,559 Speaker 2: China has been very subdured. So the US market has 17 00:00:45,560 --> 00:00:50,360 Speaker 2: actually overtaken China for meat exports in the past year. 18 00:00:50,880 --> 00:00:53,280 Speaker 2: So that's a very positive story in the sense that 19 00:00:53,320 --> 00:00:56,000 Speaker 2: we've been able to pivot away from a market which 20 00:00:56,040 --> 00:00:58,720 Speaker 2: in the past we've been heavily concentrated, and so it 21 00:00:58,720 --> 00:01:00,440 Speaker 2: adds to our resilience move forward. 22 00:01:01,160 --> 00:01:04,280 Speaker 1: What's hampering domestic production for them in the US. 23 00:01:05,800 --> 00:01:09,160 Speaker 2: It's several reasons. It's kind of a throwback to what 24 00:01:09,200 --> 00:01:11,800 Speaker 2: we saw during during the COVID pandemic and the war 25 00:01:11,840 --> 00:01:16,000 Speaker 2: in Ukraine. Mu Zeons. Mu Zeon's pasture based system has 26 00:01:16,040 --> 00:01:20,680 Speaker 2: been relatively more resilient than other are produced, particularly those 27 00:01:20,720 --> 00:01:26,280 Speaker 2: in the north Northern hemisphere where it's predominantly grain fed beef. 28 00:01:26,280 --> 00:01:30,400 Speaker 2: And then there was obviously some other supply side disruptions 29 00:01:30,480 --> 00:01:34,119 Speaker 2: with respect to energy prices, surges and gas gas gas 30 00:01:34,160 --> 00:01:36,399 Speaker 2: prices and the like, so we've paid fairly well out 31 00:01:36,440 --> 00:01:38,160 Speaker 2: of that relative to violet producers. 32 00:01:38,560 --> 00:01:40,560 Speaker 1: Obviously, Trump is in. We don't know what he's going 33 00:01:40,640 --> 00:01:42,480 Speaker 1: to do with the tower's set. We're all waiting and 34 00:01:42,520 --> 00:01:47,760 Speaker 1: watching and seeing. But given our increased exposure to the US, 35 00:01:47,880 --> 00:01:49,240 Speaker 1: does that worry you at all? 36 00:01:50,920 --> 00:01:53,360 Speaker 2: It's, as you said, it's still uncertain as to what 37 00:01:53,440 --> 00:01:56,760 Speaker 2: these tariff measures look like. One of the benefits and 38 00:01:56,800 --> 00:01:59,120 Speaker 2: it's going to the impacts are certainly going to vary 39 00:01:59,160 --> 00:02:03,720 Speaker 2: across different industries, but with respect to beef, I'll say 40 00:02:03,720 --> 00:02:06,640 Speaker 2: the impacts are likely to be fairly minimal. If you 41 00:02:06,640 --> 00:02:10,280 Speaker 2: think about the incidents of the impacts of tariffs, they 42 00:02:10,280 --> 00:02:14,080 Speaker 2: can neither fall on the export ie New Zealand producers 43 00:02:14,200 --> 00:02:18,360 Speaker 2: or on the importer US producers and consumers. And given 44 00:02:18,400 --> 00:02:20,880 Speaker 2: that supply it's very tight in the US at the moment, 45 00:02:21,639 --> 00:02:25,080 Speaker 2: and we are filling that whole, it's likely that, you know, 46 00:02:25,440 --> 00:02:28,760 Speaker 2: without the US able to scale up its own production 47 00:02:29,160 --> 00:02:32,800 Speaker 2: very quickly, the part of the cost of those tarrifts 48 00:02:32,800 --> 00:02:35,280 Speaker 2: will be passed on to US consumers and they'll be 49 00:02:35,280 --> 00:02:38,680 Speaker 2: paying a little bit more for their hamburgers, which they 50 00:02:38,720 --> 00:02:41,200 Speaker 2: probably won't be very happy about. And you know, that 51 00:02:41,320 --> 00:02:43,560 Speaker 2: leaves us in a good position. And it is also 52 00:02:43,600 --> 00:02:46,639 Speaker 2: important to kind of consider what the focus of these 53 00:02:46,680 --> 00:02:50,360 Speaker 2: tariff policies have been lately, and it's Trump's rhetoric has 54 00:02:50,480 --> 00:02:54,239 Speaker 2: been they are targeting countries with very large trade deficits 55 00:02:54,280 --> 00:02:57,640 Speaker 2: with our trade surplaces with the US rather and New 56 00:02:57,720 --> 00:03:00,960 Speaker 2: Zealand's trades has a trade serplace with but it is 57 00:03:01,280 --> 00:03:04,080 Speaker 2: very small relative to others, so we're not likely to 58 00:03:04,120 --> 00:03:07,600 Speaker 2: be impacted to the same extent. And if he does 59 00:03:07,720 --> 00:03:11,560 Speaker 2: pursue a policy of universal tariffs, then we're not going 60 00:03:11,600 --> 00:03:14,000 Speaker 2: to fear any worse than any other countries and that 61 00:03:14,080 --> 00:03:17,040 Speaker 2: we'll all be facing the same tariffs at the border. 62 00:03:17,000 --> 00:03:19,920 Speaker 1: Right because as you say, Americans are still going to 63 00:03:19,919 --> 00:03:22,959 Speaker 1: want to eat beef paddies and hamburgers, and they're still 64 00:03:22,960 --> 00:03:24,359 Speaker 1: going to need to get the beef because they won't 65 00:03:24,400 --> 00:03:26,640 Speaker 1: be able to turn their production around very quickly. I 66 00:03:26,680 --> 00:03:30,959 Speaker 1: guess the only caveat is if some country are the 67 00:03:31,000 --> 00:03:34,200 Speaker 1: Australians or I don't know, the Argentinians or something, we're 68 00:03:34,240 --> 00:03:36,440 Speaker 1: able to get an exemption and we were happy with 69 00:03:36,520 --> 00:03:38,520 Speaker 1: the tariff. That's when things would be skewed. 70 00:03:39,640 --> 00:03:42,240 Speaker 2: Yeah, that is a risk. I wouldn't say it's a 71 00:03:42,280 --> 00:03:46,080 Speaker 2: significant risk for New Zealand, but certainly we don't have 72 00:03:46,120 --> 00:03:48,560 Speaker 2: the full details yet, so it's something to look out for. 73 00:03:49,080 --> 00:03:51,840 Speaker 2: But I think a really important message to make on 74 00:03:52,160 --> 00:03:55,640 Speaker 2: tariff related policies is why do we trade in the 75 00:03:55,680 --> 00:03:59,360 Speaker 2: first place. It's because countries have a comparative advantage. They 76 00:03:59,360 --> 00:04:03,200 Speaker 2: can produce goods and services cheaper than others. So the 77 00:04:03,280 --> 00:04:06,680 Speaker 2: ultimate cost of these terror of policies is the consumer, 78 00:04:06,920 --> 00:04:09,680 Speaker 2: and US consumers are likely to face higher prices in 79 00:04:09,760 --> 00:04:10,920 Speaker 2: the long run. 80 00:04:12,000 --> 00:04:13,640 Speaker 1: Hey, you've had your latest while we've got your A 81 00:04:13,680 --> 00:04:16,080 Speaker 1: and D business confidence survey out today. What's the mood? 82 00:04:17,200 --> 00:04:19,440 Speaker 2: So we did see a pullback in business confidence, but 83 00:04:19,960 --> 00:04:23,719 Speaker 2: I wouldn't say something to be particularly concerned about. As 84 00:04:23,960 --> 00:04:27,000 Speaker 2: you know, we saw through the second half of last 85 00:04:27,040 --> 00:04:29,920 Speaker 2: you know, the last quarter of last year business confidence 86 00:04:30,040 --> 00:04:32,320 Speaker 2: was at a near decade high, and so what we're 87 00:04:32,480 --> 00:04:35,720 Speaker 2: seeing to start the new year is probably a little 88 00:04:35,720 --> 00:04:37,960 Speaker 2: bit of a reality check of firms and that you know, 89 00:04:38,200 --> 00:04:41,400 Speaker 2: these levels are still very elevated, but firms are likely 90 00:04:41,440 --> 00:04:44,960 Speaker 2: reassessing how quickly it's going to take for the economy 91 00:04:45,040 --> 00:04:47,440 Speaker 2: to get back to some new normal. It's the survey 92 00:04:47,480 --> 00:04:51,360 Speaker 2: today certainly isn't suggesting that the recovery has stalled. In fact, 93 00:04:51,600 --> 00:04:54,920 Speaker 2: it's consistent with a continued gradual recovery. So there are 94 00:04:54,960 --> 00:04:57,960 Speaker 2: positive stories in the survey despite the pullback. 95 00:04:58,000 --> 00:05:00,240 Speaker 1: We saw it all right, Henry, Thank you very much 96 00:05:00,240 --> 00:05:02,919 Speaker 1: for that. Henry Russell ains it economist with us for 97 00:05:03,040 --> 00:05:06,640 Speaker 1: more from Hither Duplessy Allen Drive listen live to news talks. 98 00:05:06,640 --> 00:05:09,839 Speaker 1: It'd be from four pm weekdays, or follow the podcast 99 00:05:09,920 --> 00:05:10,920 Speaker 1: on iHeartRadio.