Aussie exporters adamant - high dollar hurts sales

by Media Services on 29 Mar 2011 Six out of 10 exporters believe a high Australian dollar is hurting their sales, a survey released by the Australian Institute of Export shows.

More than 60 per cent of the 250 respondents said the high Aussie was having a negative impact on their exports sales.

Of those, more than half (55 per cent) said the decline in sales was between 10 per cent and 30 per cent, while nearly a quarter (24 per cent) said they were experiencing a drop of more than 30 per cent.

'Mining exports are continuing to increase, but exports outside of the mining sector are feeling the effects of the GFC and an ever-climbing dollar,' the institute's executive director Ian Murray said.

Mr Murray said he was surprised by the number of exporters who said they were experiencing difficulties.
'What was even more alarming was the belief among many exporters that if the dollar remains high, an even greater number will be hurting,' he said.

Industries that appear most affected are education, Australian-based companies working for overseas clients and agriculture - and where there are no imported components to help offset the cost of production.
'Wine exports, particularly those who depend on price, are now having trouble selling to Europe and the USA,' Murray said.

Still, some companies were importing a significant part of their raw materials at 'very good' prices, and were stockpiling while the dollar was high.

'What seems to really worry exporters is the threat of rising interest rates at the same time as having a strong Aussie dollar,' said Murray. 'This will put many export companies under an even greater pressure as it will slow marking investment when it is need most.'

Some companies are going against the trend and importing a significant part of their raw materials at very good prices. Some of them are stockpiling while the dollar is high, and other larger companies are relying on their long term contracts and their ability to manage risk more efficiently.

The study made it clear that exporters need some assistance if Australia is to retain a healthy and diverse export base. 'The first thing that needs to be done is to build the finance skills, and in particular the foreign exchange capabilities of small to medium size exporters. If we don’t, companies will continue to find themselves in trouble,' Murray said.

According to Murray, as well as building skills among exporters, it was also critically important to inject confidence back into the sector’s bloodstream so that companies will have the courage to spend more on marketing.

As part of the study, exporters were asked whether they would spend more on marketing if they received their full 50% entitlement from the Export Market Development Grants scheme and over 150 said yes. 'This is where the Government needs to start. The $50 Million that the Gillard Government took out of the scheme should go back in immediately and for the long term, the scheme must be capped at $200 Million and indexed.'

Australia is highly dependent on export earnings for income and jobs. Governments around the world are spending on an export led recovery when their currency and interests rates are at historical lows. There has never been a more important time for the Australian Government to support its exporters. 'They need to act now.'

More at www.aiex.com.au