Small exporters laying off staff as dollar rises

By LIAM DANN primary industries editor

The rising dollar is forcing some small exporters to lay off staff, says Export New Zealand's Gilbert Ullrich.

Companies had laid off staff in the last few weeks and others had extended holidays and reduced working hours to stay afloat.

"The situation is pretty grim."

The falling value of the US dollar seriously damages the competitiveness of New Zealand exports.

While the dollar remains relatively stable against most other currencies, the bulk of export sales - including those throughout Asia - are made in US currency.

Big exporters like Fonterra were able to run long-term currency hedging policies but that was not an option for smaller businesses, Ullrich said.

"It's hard to read crystal balls and it costs money."

Most small companies were busy running the business and trying to keep costs down.

They did not have time to be currency traders.

It was particularly frustrating to see the property sector and retailers talking about a booming economy when the country's export returns were falling dramatically, he said.

Meat exporters have identified the dollar as their biggest problem.

The rise of the dollar was a much greater cause for concern than the issues such as the BSE scare in the US, said Meat New Zealand chief executive Mark Jeffries.

"Up above the 67USc mark is starting to get very serious," he said.

On December 24, US wholesale beef prices were 17 per cent higher than they were 12 months earlier. But once the exchange rate rise was factored in, actual returns to New Zealand exporters were down 7 per cent on the year, Jeffries said.

Based on yesterday's exchange rate, real returns were down 9 per cent, he said.

It was inevitable the loss in export earnings would flow through to farmers, said a meat company executive, who asked not to be named.