February 28, 2008

New Zealand's seafood industry rocked by high dollar and increased spending

The New Zealand dollar's appreciation and staffing expenditures by the government is causing the seafood industry's finances to go into red ink, said Owen Symmans, chief executive of the New Zealand Seafood Industry Council.
 

A one-cent increase in the exchange rate means a fiscal loss of NZ$20 million (US$16.3 million) for the seafood sector, and the currency appreciation for the past year is estimated to have cost the industry about NZ$120 million (US$98 million), said Symmans.

The Ministry of Fisheries has increased staffing and expenditure by 38 percent and 26 percent respectively over the last five years. However, that has not resulted in improved productivity.

Symmans said the government's huge spending is causing inflation that leads to high interest rates and overvalued exchange rate.

The ministry is suggesting to increase cost recovery from the industry by NZ$8 million (US$6.5 million) annually, which Symmans said is unsustainable.

"Many people have lost their jobs and businesses, and more will follow. Businesses will be forced to look overseas in order to reduce their production costs," said Symmans.

The industry hopes that the government will offer positive solutions to the problems, which will ensure a healthy business environment, said Symmans.