Aussie dollar plunge sees renewed interest for food exports

22/02/2016 07:32 AST

The dramatic fall in the Australian dollar to a seven-year low last month is renewing interest in the Middle East for the country’s food exports.

The Middle East and North Africa is one of Australia’s largest food export destinations with the country selling as much agriculture, food and dairy products to the region as it does to China.

But four years ago a record high Australian dollar, trading above parity with its US counterpart, dug into the competitive edge of the country’s exports. Over the past three-years the Australian dollar has plunged by around 30 per cent, its sharpest three-year decline since it was floated in 1983.

This has proven to be a blessing for Australian food exporters who already face higher freight costs to many markets, including to the Middle East where it can be cheaper to move goods from Europe.

“The phones are ringing a lot more than they were a year or two ago,” Thomas Paterson, chief executive of Scorpio Foods, an Australian company that exports meat products to Saudi Arabia, told Gulf News at Gulfood in Dubai on Sunday.

The Australian dollar fell to a seven-year low in January to $0.6828 and has since rebounded to close on Friday at $0.7148. Analysts are now warning that the Australian dollar is set to once again drop below $0.70 with reports it could go as low as $0.65 in March.

Competitive price
“We’ve certainly had challenges meeting competitive price points … [but now] our prices are sitting in supermarkets shelves at a competitive price, which represents more volume for us,” Sam Tucker, Managing Director of Australian gourmet crackers company Tucker’s Natural, told Gulf News.

The falling Australian dollar is seen to be good for the Down Under economy that has seen a 60 per cent fall in iron ore and coal prices since 2011 when those commodities were selling at record highs amid the China-driven resource boom.

“There is no doubt that over the last three years the Australian dollar’s deprecation … has seen a greater opportunity for us to export,” Philip Dalidakis, the Australian state of Victoria’s Minister for Small Business, Innovation and Trade, told Gulf News.

Australia is trying to boost trade to the Middle East by signing a free-trade agreement (FTA) with the six member Gulf Cooperation Council (GCC), its largest export bloc in the Middle East.

There has been no major progress on the talks since 2009 when the GCC took over the negotiations for its members; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

Gulfnews