Jobs will go and sawmills may be forced to close if the Australian dollar continues to lose value against the Kiwi dollar, the New Zealand Timber Industry Federation says. Sources: TVNZ, Timberbiz
Australia represents 21% of the value of New Zealand timber exports and is a very important market, according to federation president John McVicar.
The industry has relied on the Australian market but since 2012, the rising value of the New Zealand dollar has eroded 20% of the value of our timber sold in Australia, Mr McVicar said.
“There simply isn’t that sort of margin in the product and mills will now be supplying at a loss to stay in the market,” he said.
“That scenario is not sustainable and will be devastating for many mills.”
Australian customers of New Zealand timber products have other options including buying from Australian mills, importing from other countries or using substitutes.
“The effect of the exchange rate movement almost totally impacts on New Zealand sawmillers … there is no countervailing benefit arising from the adjustment in the exchange rate,” Mr McVicar said.
Meanwhile the New Zealand dollar remains slightly behind the Aussie after Australia’s Reserve Bank left the cash rate unchanged at a record low of 2.25%.
The kiwi was tipped to reach parity with the Aussie for the first time since the kiwi was floated in 1985 if Australia’s central bank had cut interest rates to 2% as expected.
A weak Australian labour market and rising unemployment has seen the value of the Aussie dollar slump in recent months and the kiwi has been sitting just above 99 cents.
