Overseas demand and decreasing dollar value makes local produce in Australia more expensive

The drop in the Australian dollar value, free trade agreement signed with China, Japan and Korea combined with rising living standards of middle class in Asia is expected to grow the export market more stronger in 2015. The growing demand and lucrative prices in Asian countries are drawing local producers towards export markets, increasing the prices for home grown food to Australian consumers.

According to agribusiness strategist Dr. David Mckinna, local grown food is going to become more expensive in Australia, and the bargaining power of supermarkets is going to be diminished by stronger export markets in 2015. The competition market is also expected to bring greater agribusiness investment and expansion across supply chains for  Australian agriculture Industry, which is dominated by exports.

Primary producers trade bulk commodities like wheat, canola and barley, as well as livestock into overseas markets. Australian farmers also exports premium produce, like boxed beef and high-value niche products including some dairy goods. Dr McKinna, said until the dollar started to drop, many producers of Australian niche products were unable to compete on global markets.

“I think the dollar will get below US80 cents some time in 2015 and that will start to open export markets even further. the forecasted low exchange rate will reverse the scenario, which is already seen with products like beef and lamb, where demand is growing and the price is going up.

“Also in the seafood industry, particularly rock lobster which got up to $140 a kilogram on the back of high demand from China.

“It will soon be the same for fruit and vegetables, although it’s a bit different with dairy products because they’re subject to world market pricing and Australia is only a small player.”

The supermarket duopoly of Woolworths and Coles, which accounts for almost 80 per cent of all produce sold, will also feel the effects of a changing market, said Dr McKinna.

Both Coles and Woolworths have been subject to claims, some upheld, of bully-ing suppliers to take lower prices than reasonable.

Many farmers still say that the greatest impediment to the industry’s development is political inertia and factional politics.

Source: http://www.abc.net.au/news/2015-01-01/outlook-for-agriculture-positive-in-2015/5995524

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