Nut industry cracks under rising dollar
The Australian dollar hit a 24-year high this week, surging above US95.66 cents.
For growers and processors who rely on export dollars, it came as a blow and reduced their ability to compete in overseas markets against cheaper alternatives.
Australian Macadamia Society spokeswoman Morag Page said growers were already getting lower returns for their nuts.
"They're not being given the prices they'd like to receive for their nuts and struggling to make what it costs to produce them," she said.
Although the situation may seem grim, marketing manager of Alstonville macadamia processor Agrimac Darren Burton said there could be some positives to come out of it.
He said if the export market was weak, the industry would just have to focus on solutions - such as getting Aussies to eat more macadamias.
Mr Burton said while the industry could not ignore their export market, developing the domestic market more would help overcome the impact of the dollar, which could remain high for some time.
"The domestic market has grown by 10 to 15 per cent per year for the past few years," Mr Burton said.
"It is the easiest country in the world to promote macadamias because it's a native to Australia."
In the face of a rising dollar, Agrimac had developed their domestic market to the point that it was their largest customer, he said.
This year they will sell more than $5 million worth of macadamias to Coles.
But the export market still comprises 70 per cent of the industry, he said.
"The dollar is having a significant impact. It's reducing our ability to pay a better price to our growers," he said.
"Our major export market is the Japanese market and the dollar is very strong against the Japanese yen.
"When we convert the product back into Australian dollars the returns are significantly lower."
Mr Burton said just five years ago the currency rate was about 60 yen to the dollar and now it's almost 100 yen.
As a result, between 2002 and 2006 the price in yen for Aussie macadamias almost doubled.
"As the product becomes more expensive the implication in demand drops off," Mr Burton said.
"Our main competition is coming from South Africa. They have been in the fortunate position where their currency has actually weakened."
Mr Burton said some growers would probably move out of the industry and sell their farms.
"But I think growers who have been in the industry for a fair period of time and have seen all these cycles before will decide to stay around," he said.
When the Australian dollar breached the US96 cent mark this week it was highest comparative level since 1984.
It comes after a recent surge in oil and commodity prices, and a tumbling of US consumer sentiment.