The fickle finger of exchange rates has rocked the produce trade over recent months, turning the tables for global suppliers. This time last year, Southern Hemisphere exporters such as Australia and New Zealand were buoyed by a slump in their currencies against the surging US dollar. With most deals in Asia done in US dollars, or in local currencies that often mirror its movement, the strong greenback made these suppliers much more competitive in the region. Alas, such exchange rate relief appears to have been a short-lived result of the financial crisis, which saw the hot money flee to the relative safety of the US dollar.
The greenback has since reversed course, leaving these Southern Hemisphere suppliers to watch in dismay as their currencies climb again. The contrasting fortunes are underlined in the November/December edition of Asiafruit Magazine, with the weaker US dollar boding well for shippers of California navels or Washington apples, but signalling a tough season for key Southern Hemisphere exporters getting into stonefruit or grapes.
It’s easy for exporters to get despondent about exchange rate volatility. After all, there’s little they can do to mitigate the impact, but global suppliers should draw consolation from the more steady trends in Asia’s produce trade that stand out in the November/December edition of Asiafruit Magazine. The growing purchasing power of Asia’s twin engines of economic growth – India and China – is becoming clear. If we take apples, for instance, domestic shortages in India are fuelling impressive import growth, while China’s hungry domestic market is pushing up prices and hitting its exports. Although China’s supply footprint across South East Asia remains large, its internal demand and rising prices are creating opportunities for other global suppliers to the region’s markets where consumers are broadening their horizons.
In another encouraging trend, suppliers and buyers are now responding to these opportunities by building partnerships to ensure products are effectively promoted to the consumer. The modern retail trade is a good platform to introduce new items, but Asian retailers need supplier-support to realise the benefits to their bottom line of selling a high-value product like cherries for instance. Whether it be Zespri’s kiwifruit push in Malaysia, Australian stonefruit promotions in Thailand or a generic campaign for US fruits in Indonesia, a little supplier push can trigger the consumer pull that takes the game beyond a price contest decided by the fickle finger of exchange rates.
