High dol­lar may take ‘cream’

Matamata Chronicle - - Rural Delivery -

Fon­terra Co-op­er­a­tive Group’s 2.3 per cent re­vi­sion down­ward of its milk price fore­cast for the 2011-2012 sea­son demon­strates the trade-ex­posed na­ture of our pri­mary in­dus­tries, Fed­er­ated Farm­ers says.

With the present global eco­nomic out­look, this may not be the only re­vi­sion for the 2011-2012 sea­son.

Fed­er­ated Farm­ers dairy chair­man Willy Le­ferink said: ‘‘I don’t think there are many farm­ers who were not ex­pect­ing a down­wards re­vi­sion.’’

‘‘We had in­di­ca­tions from the Global Dairy Trade auc­tion that prices have been drift­ing south. Most eco­nomic fore­cast­ers also ex­pect com­mod­ity prices will ease over 2012. It’s fair to say the in­ter­na­tional picture is more than a lit­tle choppy, es­pe­cially with China re­vis­ing its gross do­mes­tic prod­uct fore­cast down­wards,’’ Mr Le­ferink said. ‘‘This is the re­al­ity New Zealand’s pri­mary ex­porters have to deal with.

‘‘We’re com­pletely trade-ex­posed and it’s a fact of life for us. Times can be good but we also know from the 2008-2009 sea­son, they can be pretty hard too.

‘‘While the pri­mary in­dus­tries are gen­er­ally grow­ing, over­all sec­tor debt lev­els aren’t. Many farm­ers have heeded our ad­vice to run con­ser­va­tive bud­gets fo­cussed on re­duc­ing debt.

‘‘That said, we’re in­creas­ingly anx­ious over how the Kiwi dol­lar is de­fy­ing grav­ity. While soft com­modi­ties are cor­rect­ing our dol­lar ought to be do­ing the same, but isn’t.

‘‘While good grow­ing con­di­tions have helped us put in a blinder of a sea­son, a high dol­lar could well skim the cream,’’ Mr Le­ferink said.

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