Silver lining in dollar dive

THE falling value of the Australian dollar offers a mixed bag for WA.

In theory, the lower value of the Australian dollar against the US dollar should make Australian exports more attractive.

Japan used the low value of its yen for years to build itself into a manufacturing power-house.

And for those export contracts negotiated in US dollar terms, the return in Australian dollars to the seller will be higher.

But there are those who feel the Australian dollar’s value is a measure of the country’s virility.

Latest figures from the Australian Bureau of Statistics show WA’s exports are still growing strongly.

In the year to January, WA’s exports were worth $30 billion, a growth of 41.2 per cent, while imports were worth only $9 billion, rising by 4.4 per cent.

However, in the latter part of 2000, export growth slowed considerably — partially due to falling commodity prices and the relative strength of the Australian dollar. In the June quarter WA’s export growth peaked at 53.9 per cent.

Oil and gas remains WA’s biggest export, followed by other resources such as iron ore and gold.

Plant and equipment, particularly for the resources industry, and building materials were some of the fastest growing import categories.

However, the resources sector, which is WA’s largest exporter, believes the falling Australian dollar is hurting it.

A Chamber of Minerals and Energy spokesman said most mining companies sold their products on forward contracts so the relative value of the Australian dollar made little difference.

“Our concern is the silver lining view of the drop in the Australian dollar is inaccurate,” he said.

“A lot of mining equipment is imported so it is not great news for us when the dollar drops.

Margins are particularly close at the moment.”

However, WA’s agricultural sector is bullish on the effects of the falling Australian dollar. WA Farmers Federation economics portfolio holder Dale Park believes the declining dollar is good news for farmers.

“As exporters we’re finding it easier to access markets,” Mr Park said.

“With things such as wool it takes longer to filter through but meat has seen the benefits already. Meat prices are already going up in Australian dollar terms.”

Mr Park said wheat and grain prices had been affected immediately.

“I think we’re above $200 a tonne these days,” he said.

“But like the mining sector, some farmers — particularly those in the grains sector — believe the weaker Australian dollar will make it more expensive to buy farm machinery.”

The Western Rock Lobster industry is finding the declining dollar value to its liking.

Western Rock Lobster Development Group chairman Tony Gibson said the dollar’s lower value was making WA’s product look even better.

“We like to think we sell the best lobsters in the world and the Australian dollar is making our prices look extremely competitive,” Mr Gibson said.

“Our one concern is that there has been some resistance this year to our boiled product from Japan. We think that’s due to some importers holding inventories from last year.”

Even the wine industry is benefiting. The demand for Australian wines overseas is increasing, while the wine market generally has been waning.

Chateau Xanadu marketing manager Kelly Renouf said the winery had its best month ever when the Australian dollar dipped below US50¢.

However, people involved in export industries benefiting from the diving Australian dollar may need to spend their spoils quickly.

Fine overseas wines, spirits and imported car prices are all likely to rise.

Premium motor dealership Alf Barbagallo spokesman Greg Ross said there had been no news of any price rises as yet but he believed they were on the way.

“If someone was ordering something special from the factory, we couldn’t guarantee anything on price,” Mr Ross said.