Opinion: currency and politics bring positive outlook for Aussie produce
By Produce Marketing Association (PMA) Australia-New Zealand CEO Michael Worthington
For the past few years, the Australian dollar has been riding the crest of a wave, mostly at or above parity with the U.S. dollar. But over the past few weeks it has slid almost 15% and is now struggling to stay above 90 cents.
This is obviously good news for exporters and with many analysts forecasting that 80-85 cents is where it will get to over the next 12 months, many companies who had just about given up on exports are now actively pursuing opportunities, particularly in Asia.
The country's main export fruit products are citrus and table grapes, both of which are facing stiff competition from other southern hemisphere producers. But both products do have a strong trading history and are renowned for their excellent quality, so when the dollar weakens, the viability of exporting does become a lot more attractive. With the Australian dollar falling against the U.S. dollar at almost twice the rate that the Chilean and South African currencies have fallen, these products have become just that bit more competitive.
Australia does also have some other products that are on the export radar and the timing of the lower dollar could not have come at a better time. The volume of mangoes and avocados from large plantings in the past decade will continue to grow and both of these products will need to find alternative markets if Australia's domestic market is not going to be saturated. Cherries are another product in good demand from Asia, with export volumes expected to gradually grow. Opportunities for stonefruit and pears are also looking brighter.
On the vegetable front, the picture is a little less clear. The industry is putting more effort into seeking out export opportunities, although it is unlikely that the export of carrots, onions, cauliflower, celery and broccoli will ever reach the levels achieved in the 1990s again, with many of these products now produced cheaper elsewhere.
Political announcements bring added hopes
The political announcements that are also giving the industry a shot in the arm are arising because both main political parties – as they head to the polls in early September - are trying to talk up Australia's role as a major source of food for the fast-growing Asian market, as they seek out job-creating industries to take the place of the mining boom that the country has benefited from over the past decade.
There is now talk of a "dining boom" as the next big thing for Australia, but this does need to be taken with some caution. The reality is that Australia is a (relatively) high cost producer and only if it invests in smart technology and value-adding will it be able to take advantage of the market opportunities in Asia. Yes, Australia does have a lot of agricultural land, but much of it is just not suitable for the types of products in demand and at the right price.
So, all-in-all, export prospects are improving, but it will require greater commitment, smarter marketing and more strategic thinking to re-build a fresh produce export industry that is not so reliant on favourable exchange rates in the future.