Farmers grappling with volatile currency
Australian farmers, already hit by the country's worst drought in 100 years, are now grappling with exchange-rate volatility.
'With the weather, at least you know that it will rain one day. But with the currency, the way it's been this year, it's hard to predict,' said Charles Burke, the chairman of the economics committee of the National Farmers Federation.
The federation estimated that every 1 per cent rise in the Australian dollar against the greenback resulted in a loss of A$115 million for Australian farmers.
With the aussie up 30 per cent in the past 18 months, that means Australian farmers have collectively lost A$3.45 billion as a result of currency appreciation.
'The volatility of the currency is even more of a concern than the actual dollar value,' said Mr Burke. 'At least if it was stable, you can take steps, but the way it's been up and down this year doesn't give you any confidence at all.
'And with the country just showing signs of recovering from drought, this rise in the dollar couldn't have come at a worse time.'
Wheat and other grain growers are the most affected by the aussie's boom. With a global oversupply, grain exports are suddenly more expensive in a tight market.
The beef industry, however, is slightly more insulated. Australia exports a hefty proportion of its beef to Asia - notably to South Korea and Japan - where US exports are still banned because the of BSE, or mad cow disease.
Despite this, the federation has identified the rising Australian dollar as the most important challenge facing the rural economy.
'Its frustrating that we here in Australia have no control over it,' said Mr Burke. 'The world is just responding to the situation in the American economy and that has a knock-on effect to us.
'Mid-year, when the [aussie] was around 65 US cents, we thought that was sustainable for our primary producers.'
