Owen Hembry

Business news editor of the New Zealand Herald

Farmers forced to ride out currency, export volatility

Federated Farmers president Bruce Wills. Photo / APN
Federated Farmers president Bruce Wills. Photo / APN

Volatility is a fact of life for exporters, says Federated Farmers president Bruce Wills.

Farmers had been looking with increasing concern at a rampant kiwi currency but the world had changed a lot in the past week and the dollar was down, which was useful, Wills said.

"I'm guessing we're probably going to see commodity prices come back as well because the economies that we sell into are obviously now suffering some sort of contagion that they haven't previously felt," he said.

"I know it's not easy with just the incredible gyrations that we're seeing but sadly that's doing business in today's world and the bottom line is we either cope or we get out."

Many farmers did not start selling a lot of produce until the end of the year or early next year, Wills said.

"Who knows where the markets and the currency will be at that stage. We just have to accept it, roll with it, watch it closely but there's not a lot we can do."

BNZ economist Doug Steel said there was a lot of fear in the markets.

"It could just be a shake-out, a reality check to where world growth outlook is a little bit softer, or something a little bit more nasty and we won't know that until the dust settles a little," Steel said.

The dollar was not low but was at least taking the edge off the decline in world product prices.

"It is the exporter's friend in times like these that when the world does get a bit scary and commodity prices come off the New Zealand dollar does tend to fall and it's certainly been doing that over the last few days," he said.

Goldman Sachs economist Philip Borkin said a weakening global economy and a stronger kiwi dollar was a bad combination. "That makes an export environment much more challenging." But "structurally and longer term we're still very optimistic".

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n3 at 24 Sep 2014 05:04:15 Processing Time: 686ms