8 Oct 2010

Dairy industry expects exports to suffer if dollar remains high

12:50 pm on 8 October 2010

The dairy industry says exports will suffer in the long term if the New Zealand dollar remains high against the US currency.

The kiwi broke 75 cents against the US dollar on Thursday - its highest point in almost a year.

The Dairy Companies Association represents the interests of export businesses such as Fonterra and Goodman Fielder.

Executive director Simon Tucker says most of this country's dairy products are traded in US dollars.

He says dairy producers are used to managing exchange rate risk by purchasing forward cover, which guarantees much of their export sales at an agreed exchange rate.

But Mr Tucker says a day of reckoning will come if the exchange rate stays at the current level for too long, sooner or later.

Pipfruit too

Turners & Growers says the exchange rate is causing the biggest dent in grower returns for exports of apples.

Chief executive Jeff Wesley says the strength of the New Zealand dollar against international currencies is taking about $10 off the price of a box of export apples.

He says there has been a massive change in the exchange rate in the past two years.

Mr Wesley says the apple industry would be in a far better position if it could export to Japan and Australia.

New Zealand has been fighting to get apples into Australia since 1921.

WTO appeal

The World Trade Organisation disputes panel is currently considering an appeal by the Australian Government on a decision it made earlier this year that rejected Australia's argumment that important New Zealand apples would risk the introduction of the bacterial disease fireblight.

The disputes panel ruled that a restriction on the importation of apples from New Zealand broke international trade rules.

A decision on the appeal is expected in November.