March 31, 2008

Australian dollar harms beef exports
 

Exporters of Australian beef have less revenue while customers have increased costs due to the appreciation of the Australian dollar.

The rising Australian dollar is the main cause of the losses made by exporters over the past year and lower cattle prices to producers.

While for Australian cattle lot feeders, this and high grain costs have led to severe losses.

The demand for Australian beef has grown in Japan since US imports have been restricted in late 2003, leading to a 37 percent increase in export volumes and a 30 percent rise in average beef export values in yen terms between 2003 and 2007, according to the Australian Bureau of Statistics.

Average returns to Australian exporters, however, decreased 2 percent between 2003 and 2007. This is so even as Japanese end users have been paying higher prices for Australian beef.

With the Australian dollar continuing to hover at US$0.93, which is 17 percent higher than 2007 and 85 percent more than March 2001, revenue from Australian exports remains under pressure.

Most analysts forecast that the Australian dollar will reach its peak this year and gradually decline thereafter.

According to Meat &Livestock Australia, a significant decline is likely to be needed to keep beef export returns from declining further as US products are soon to return to Japan and South Korea.