Riding out the dollar doldrums
BUYERS of imported goods may be revelling in the strength of the Australian dollar, but the region's exporters and tourism operators are finding it an increasing challenge.
The Aussie dollar hit a five-month high against the American greenback yesterday, starting the day at 93.57 US cents, and also buying 78.31 yen, 72.6 Euro cents and 60.61 pence. The last time it was this high against the greenback was in April.
“From the point of view of our primary producers, the higher dollar does have anegative impact,” Chris Thomson, marketing co-ordinator for the Northern RiversBusiness Advisory Service, said yesterday.
He said the surging dollar made it harder to maintain competitiveness against Chile and other South American countries in the same climatic belt.
“It has an impact on producers' bottom lines, and on their ability to reinvest,” Mr Thomson said.
“From an imports point of view, it's cheaper to buy international fertilisers, but that doesn't go near compensating for the higher dollar. You can't devalue the currency. People just have to get sharper with their costs and look at what they're offering the market.”
One primary industry that is heavilydependent on exports is macadamias.
About 70 per cent of kernels produced in Australia go overseas, Darren Burton, of Agrimac Macadamias in Alstonville, said.
“The changes in currency have a hugeinfluence on macadamia exporters'returns,” he said.
The situation was particularly bad in relation to the US dollar and the Euro, Mr Burton said. The weak US currency meant prices in North America had soared by 70 per cent in the past year. In Europe, the price hike for customers was in the 40 to 50 per cent range ‘which is tough for markets to accept', he said.
“We're praying that early next year when we're putting in our annual contracts for 2011 we'll see an easing in the currency difference in the US and Europe,” Mr Burton said.
Primary producers such as the Big River Group are hit by a double whammy, its managing director, Jim Bindon, said. While the cost of exports climbed, it was a bigger problem staying competitive in the face of increasing cheap imports, he said.
Mr Bindon said the price of timber coming in from Indonesia, China and Chile was atrecord low levels, and that was having a huge impact on their business. The company's best response was to market its products on the strength of their much higher quality, he said.
Tourism was also an export business of sorts, said Northern Rivers Tourism chief Russell Mills. But he didn't believe in the short-term currency fluctuations would turn overseas visitors off if they were thinking of coming to Australia.
He also said he did not believe discounting prices for such things as accommodation was the answer in the tougher market.
“I believe in adding value,” he said.
Mr Mills said groups such as Byron United had realised the region couldn't take tourism for granted, and were working towards co-operating on ‘destination marketing' to stay competitive.