Dollar decreases of 1% boost farm earnings of $190 million: NAB
Every 1% drop in the dollar should increase Australian farming earnings by $190 million, according to National Australia Bank's agribusiness economist Michael Creed.
And while much of the recent currency devaluation was based on concerns about risk in global markets, it had not translated through to reduce demand for agricultural commodities, he told Fairfax Media.
The dollar has fallen more than 7% from its peak of $US1.08 this year.
EL&C Baillieu Stockbroking analyst Simon Dumaresq said falls in the dollar could also fuel a new round of foreign investment in Australian agriculture.
"A lower currency could also promote acquisitions of Australian assets from foreign companies looking to secure supply and meet the growing shortage of many agricultural products in Asia," Dumaresq advised.
Elders chief executive Malcolm Jackman expects the depreciation of the Australian dollar will not only improve the value of exports but put pressure on the prices of food imports which makes local produce more affordable.
But The Stock & Land reported only one financial institution had made any reduction in interest rates for agribusiness customers in the past month based on monitoring of agribusiness loans by the National Farmers’ Federation (NFF).
NFF economics committee chairman John McKillop said the lack of movement from the banks was extremely disappointing for agribusiness customers.
