Rising dollar hits the farm - Australian Export Awards - mentions decreases in specific types of exported agricultural products, such as wool, meat, etc - Brief Article

Business Asia, June, 2002

Australia's farmers have pinned their business hopes on the local currency, which until this year was doing just fine--slumping almost one quarter against the US dollar.

After two years of declines, the Australian dollar has gained eight per cent since 1 January, making it the fourth-best performer among the world's top 17 currencies.

A rising currency is bad news for Australia's farmers, who are forecast to ship $31 billion of goods in the year ending June. With most of their products sold in US dollars, a stronger Australian dollar translates into less revenue in local currency terms.

"The higher the currency goes, the harder it is for us to make ends meet," said Marlee Ranacher, a rancher in the Northern Territory. A weak currency, though, makes the 1500 Brahman cattle she sells each year from her 200,000-hectare Bullo River Station, cheaper for buyers in Indonesia and the Philippines.

Farm goods make up one-fifth of export earnings for Australia, the biggest shipper of beef and wool, and second-biggest for wheat and sugar.

Cattle prices have dropped by one-fifth so far this year, eroding profits for ranchers, such as Australian Agricultural Co. Shares of the Sydney-based company, which owns the world's second-biggest cattle herd, have declined 16 per cent so far this year.

Livestock prices may decline more, with some currency analysts predicting the local dollar will come to rise.

"It's on its way to 60 cents," said Greg McKenna, market strategist at National Australia Bank Ltd.

Every one-cent rise in the Australian dollar crimps cattle ranchers' revenue by 0.8 per cent, according to the Government's commodity forecaster, the Australian Bureau of Agriculture and Resource Economics, or Abare.

For wheat and barley farmers, the same currency increase means a one per cent slide in revenue, Abare said.

"A higher Australian dollar represents the greatest threat to grain prices" for farmers, said Andrew Tasker, an analyst with ProFarmer Australia.