By Paul Spackman
UK farmers know only too well how much impact the exchange rate can have on profits - both good and bad.
Fortunately at the moment, the weak value of sterling against both the euro and dollar is generally good news for farmers here - single payments were 15% up this year and the benefits for exports, livestock markets have been well aired.
But spare a thought for our friends a few thousand miles away in New Zealand. According to John Mabb from Meat & Wool New Zealand, who (bravely?) gave the opening presentation at this year's EBLEX conference for English farmers, sheep producers in NZ could see profits drop back close to a 50-year low next season, thanks in a big way to the exchange rate.
The economic turmoil in the US and Europe means that currently the NZ dollar looks pretty strong against the US dollar, which isn't such good news for a country that relies heavily on exports, particularly in their summer/ autumn - November to June...
Currently one US dollar buys around NZ$1.3, but back in March it would have bought over NZ$2.
Mr Mabb reckoned these currency fluctuations, combined with changes in market prices and input costs could see average sheep returns to farmers fall from NZ $89/head to NZ $66/head in 2009/10. That's quite a drop for any producer to have to stomach, no matter how well they are adapted to the somewhat unpredictable nature global markets.
I've been to many conferences and heard speakers talk of "increasing global volatility", but hearing things like this suddenly make it all seem very real, rather than stuff of economics textbooks. How much sympathy English lamb producers in the audience felt towards their New Zealand counterparts I wouldn't like to guess!
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