Following the dollar part of life for farmers

Press, 21 October 1987, Page 14

Following the dollar part of life for farmers

PA Wellington Following the value of the New Zealand dollar has become part of the dally lives of farmers who feel helpless under the impact of the exchange rate, according to the Rural Bank. After visiting farms in Otago recently, directors of the bank say that farmers and people in rural servicing towns regularly talk Of movements in the kiwi dollar and the personal impact on them.

“Often they indicated (to us) that while they could control their own financial situation, the value of the dollar was one of the factors Oyer which they had no control, but which was controlling their futures,” the directors say in a report on their trip. The comment from one former in the remote Owaka Valley was, "We even watch the. value of the dollar to the second decimal point” Weighed down with debt servicing and infla-

tion against their budgets, formers are finding a few points rise or foil are important to success or failure in their year’s business, the bank says. “Farmers’ businesses may be well planned, con-tingency-based and basically correct, but factors beyond their control often dictate a different and marginal survival path, restricting farm development or maintenance.” Otago formers Indicated they make every decision with an eye on the bot-

tom-line but they feel the decisions most affecting them are in areas outside their control, the bank' says. Noting that New Zealand farmers are basically price takers, the bank says that in order to max-, imise their return, they have to blend farm husbandry and management skills with awareness of the state of the market, the dollar and other outside influences. The bank has seen cases where a month between sales has meant a

difference of , about $20,000 In the return received on a fanners wool clip, “In the dairy industry, the rule of thumb observation is that every, cent rise against the States dollar can cost the former about $2OOO in. ; annual returns.” y Lenders are also putting

iwnmiMi .iinwHwwffiu _ ance . under tighter scrutiny and formers have to depend almost solely on actual revenue for their planning, the bank says. ■•A, “if this revenue is inadequate, they, are just putting form development . , and maintenance on hold, as directors were told," the bank says.