Sixty-five per cent of Pacific Island exporters say extreme weather has negatively impacted their business over the past year, a new survey reveals.
Among those affected, 41 per cent said extreme weather conditions have had a major impact on their business, according to Pacific Trade Invest (PTI) Australia’s 2020 Pacific Islands Export Surveyreleased this week.
Now in its eighth year, the biennial survey provides insights into trends, changes and business sentiment across 16 countries in the Pacific Islands.
For the first time, the survey of 226 export businesses was expanded to explore the impacts of weather patterns.
Increased frequency of storms (38 per cent), extreme rainfall (26 per cent), rising air temperature over land (19 per cent), decreased rainfall (17 per cent), increased flooding (16 per cent), prolonged drought (14 per cent) and rising sea levels (12 per cent) are some of the weather patterns respondents said have affected their businesses.
According to the survey, agriculture was the industry hardest hit by extreme weather. Of all export businesses affected by extreme weather, decreased productivity (56 per cent), damage to crops or products (50 per cent) and an increased cost of supplies (32 per cent) were reported as some of the main impacts.
Decline in business confidence
“While nearly half of all businesses experienced an increase in export orders over the past 12 months, the survey found a quarter of exporters are now reporting a decline in revenue as extreme weather and COVID-19 affect productivity and disrupt operations,” said Caleb Jarvis, PTI Australia’s Trade and Investment Commissioner.
“As businesses navigate economic uncertainty, they are feeling less confident about the coming year. Twenty-seven per cent expect a decline in revenue and there has been a significant decline in exporters looking to hire new employees over the next 12 months.
“However, despite the crisis, manufacturing and agriculture remain confident, indicating a strong ongoing demand for their products.”
The Lowy Institute’s Pacific Islands Program Director, Jonathan Pryke, said that while many Pacific Island exporters were doing it tough, there was good cause for optimism.
“The persistent constraints of natural disasters, alongside high fuel, finance and logistics costs, did not stop nearly half of exporters in the survey reporting a growth in export revenue in the previous year. However, the pace and ferocity of COVID-19 has up-ended this optimism,” Mr Pryke said.
Tourism operators expecting a decline in revenue
“The rapidly changing economic context is reflected in exporter sentiment. While 61 per cent of businesses expect to see export growth in 2020, these numbers are anchored by manufacturing and agriculture.
“Tourism operators – almost half of the survey sample – are less optimistic, with 49 per cent expecting to see revenues decline.”
The survey found revenue generated from international tourists is expected to decline from all geographic areas, particularly tourists from China, Japan and North America.
“The resumption of air travel through a trans-Pacific bubble will be a critical lifeline for the tourism industry and will help to drive down cost for agricultural exporters, who rely on air freight to get their goods to market,” said Mr Pryke.
Driving export growth
To help address economic and environmental challenges, the survey found businesses are driving growth through improving process efficiency, developing new products and services, and enhancing digital marketing. Three quarters of businesses, particularly in manufacturing, are also using online channels to generate export revenue.
“Following this survey, PTI Australia will continue to help exporters grow their online presence by providing data, knowledge, training and technology – making them more resilient to external shocks. It’s critical that solutions are found to key challenges such as access to affordable online payment solutions, cross-border payments and cost-effective small parcel logistic services,” said Mr Jarvis.
PTI Australia is an agency of the Pacific Islands Forum Secretariat. Funded by the Australian Government, it facilitates trade and investment in the Pacific Islands.
Exporting to new markets
The survey also found that 74 per cent of businesses are planning to export to new markets over the next three years. Asia continues to hold the most appeal, while export to Europe and Australia will become increasingly popular, according to the survey.
Export to regions outside of the Pacific Islands continues to be high (94 per cent), with Australia and New Zealand remaining the two major export destinations.
“If there is any silver lining to 2020, it’s that Pacific exporters are accustomed to doing it tough. Despite significant headwinds, many exporters not only prevailed, but prospered. Let’s hope that resilience continues in 2020,” Mr Pryke said.