Gas leak sparks fears over food production losses

By Nilpa Shah

- Last updated on GMT

Related tags: New zealand, Industry, Food, Food industry

New Zealand gas leak sparks fears over production losses
New Zealand gas leak sparks fears over production losses
A gas leak on New Zealand’s upper North Island forced the closure of many food factories in the affected area, stifling production and increasing concerns for the country’s economy.

It has been reported today that the gas leak has since been repaired but we spoke to those affected last week, to find out what impact the leak was having on the New Zealand food industry.

The Maui pipeline, which is managed by gas and electricity company, Vector, supplies gas over 307km to Auckland and its surrounding areas. The leak was discovered late on Monday evening and many food manufacturing industries had been forced to cease production altogether, as the company tried to find a solution.

Commenting on the issue to FoodNavigator-Asia.com, Katherine Rich, chief executive of the New Zealand Food and Grocery Council (FGC) remarked that parts of the New Zealand food industry had been “crippled by this outage​”, adding that the situation was “very disheartening for all involved​.”

“Major impact” on confectionary production says Nestlé NZ

One of the companies affected by the leak was the New Zealand branch of Nestlé. Maurice Gunnell, corporate services manager, told this publication that the gas leak had affected its Wiri factory based in south Auckland.

The factory was forced to partly close down earlier this week and Gunnell explained that the leak had a “moderate impact​” on its culinary production but a “major impact​” on confectionery production.

He added that stock cover had also been affected but that the company was managing this issue with its customers.

According to Radio New Zealand it is thought that initially up to 5000 businesses were asked to stop using gas whilst the leak was being fixed.

Ian Greenshields, the director of Corporate Affairs for Goodman Fielder, a manufacturer and distributor of bread and dairy products, said that the company experienced a “temporary shortage of gas which meant that bakeries in the north of the North Island were not operating for around 36 hours​.”

He also explained that the company had relied on its own bakeries in the south of the country to supply “a limited range of breads​” whilst it waited for the gas supply to be restored.

“Some product shortage” expected in Foodstuffs stores

The leak not only affected food manufacturing plants but supermarkets too, where everday grocery items such as bread, milk, sugar and cereal were available in only limited quantities.

Murray Jordan, managing director of Foodstuffs Auckland, remarked that the knock-on effects of the leak would see “some product shortage​” as suppliers strived to make up for production losses.

Jordan added that Foodstuffs’ chain of supermarkets were “doing their utmost to limit customer disruption​” and were appealing to their customers to “keep to their normal shopping habits​” instead of purchasing higher quantities of products to ensure that supplies remained consistent.

“Lost production hours can never be regained” says Rich

There were real fears that if the crisis had not been resolved promptly, the impact of the leak would have been felt nationwide. Rich stated that if the present crisis continued into this week the effect on the FGC’s member companies, which include Weet-bix producers Sanitarium and dairy giants Fonterra, would have been “more than that of the Christchurch earthquakes​” that affected the country earlier this year.

As for the immediate impact of the gas leak Rich believes that “production will bounce back relatively quickly​” but she also acknowledges that “lost production hours can never be regained​.”

Like many others, Rich is fearful of the impacts on the New Zealand economy as a whole, which has been recently boosted by the country’s successful hosting of the Rugby World Cup. She explains that New Zealand’s food industry is “one of the main export earners​” with 50 per cent of total income coming from food exports.

Rich suspects that when total losses to industry are eventually calculated, the figure will amount to something reaching “in the hundreds of millions of dollars​.”

According to estimates provided by the New Zealand Institute of Economic Research, the gas leak could have been costing the economy anything from between $40m (USD 32.7m) to $175m a day.

Related topics: Business, Oceania, Supply chain

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