Salute to the bearers of glad tidings

Praise where praise is due – and a special salute from Alf to the purveyors of GOOD NEWS about our economy.

At the same time, Alf is tidying up the case for the prosecution to have more purveyors of pessimism taken away in the tumbrels for a public pummelling. Or maybe we won’t bother with the formalities, and just haul the buggers off anyway.

Let’s start with the cheery stuff.

Elspeth Ludemann, a North Otago farmer has written a confidence-lifting piece for the Otago Daily Times headed “Rural centres holding strong as economy plunges”.

Falling property prices and job losses in the cities signal tougher times there, she says

But while people are concerned, there are few signs the recession has hit this part of rural New Zealand yet.

People are wary and many are worried, but one small-town retailer told me his sales for the first six weeks from the start of December had already equalled those for the whole three months of last summer.

The strength of the rural hinterland is one of the main reasons that, at least for now, North Otago is defying predictions of a looming crisis.

Irrigation development in the past few years, last season’s dairy payout and improved returns for crops kept the district’s economy buoyant even though sheep and beef farmers were getting poor prices.

The wonderfully uplifting Elspeth recognises that Fonterra’s opening payout of $6.60 this season has already been reduced to $6 and is expected to go even lower this week. But again she strikes a positive note –

…even if it goes to $5, it will still be better than the long-term average.

And defying the doomsayers, beef and lamb prices are going up. After years of falling returns, sheep and cattle farmers are having a much improved season.

Elspeth does not fail to put things in perspective. She notes that last season’s prices were so depressed, the only way meat prices could go was up if many farmers were to stay in business.

The improvement is overdue and is due in no small part to the sharp fall in sheep numbers in the wake of dairy conversions and drought. It is also being helped by the fall in the value of our dollar.

But the improved returns are a glimmer of silver in the clouds which so many commentators see gathering, and balance sheets are being further brightened by falls in interest rates, inflation and the price of major inputs like fuel and fertiliser.

That contrasts with the 1980s, when inflation and interest rates got to more than 20%, the dollar was also high and stock prices fell.

People who not only survived the ag-sag of the ’80s but have prospered in its wake acknowledge that the economic outlook isn’t good, but some of the lessons which helped them two decades ago will be put to good use now.

Good stuff.

Bloomberg’s Tracy Withers deserves commendation, too, for quoting Finance Minister Bill English as saying New Zealand’s dollar has declined to levels that should benefit the nation’s exporters when global markets and prices recover later this year.

“In the long run, 80 cents makes it difficult to get the adjustment New Zealand needs of pushing resources into the export sector,” English, 47, said today in an interview at his office in Wellington’s Beehive parliament buildings. “At 55 cents that’s much more likely, as we come out of a recession.”

He declined to provide forecasts for the New Zealand dollar or say what level the government wants it to be.

But according to Bloomberg –

The government wants to bolster overseas sales of meat, butter and wool as it seeks to make the economy become less dependent on domestic consumption, he
said.

Nick Churchouse, at Fairfax, is the bugger we will hauling of in the tumbrels today for a report with a heading which seems to contradict English – “Few cheer fast-sinking dollar”

Churchouse wrote –

The dollar could be depressed for years yet, with a potential exchange rate below US50c earning exporters a barbed reprieve.

The New Zealand dollar has dropped by 15 per cent against the greenback in the past three months and is now about 30 cents below its high. The dollar was at US53.05c over the weekend, having dropped US2.5c during the week.

The sinking exchange rate is a relief for exporters battling to compete internationally, but the underlying factors in the shift are unsettling.

A “depressed” dollar sounds like a bad thing. Not if it helps our exporters to export and dampens what has been an excessive demand for imports, which happen to be a prerequisite to getting our current account back in order, trimming our whopping overseas debt and restoring the confidence of credit rating agencies that are keeping a close eye on us.

One Response to Salute to the bearers of glad tidings

  1. […] sacks  and I think he has a point – and not just because I was flattered when he saluted me as the bearer of glad tidings   and quoted from my opinion piece  in the ODT (though I don’t think he realised that […]

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