Strong rand plays its evil role

BEING A specialist in perishable exports makes a company beneficiaries or victims of the up-and-down vagaries of the SA perishables market, according to Mike Froy, financial director of FTW’s traditional number one in the annual Top 30, Grindrod PCA. And, looking at the figures for 2003 compared to 2002, the company moved from being a beneficiary of a good perishable export trade in the earlier year to a victim last year – dropping by –7.78% to a rand turnover of R219.8-million in 2003 compared to growth of 31.9% the previous year. The strong rand played its evil role in the fortunes of the perishable exporters last year, according to Froy. “The strong rand affects the “cheaper” export commodities the most – and fruit and vegetables are two of these. “Producers achieved better returns locally in some sectors than in the overseas markets.” A case in point is asparagus, Froy added, which saw the majority of this product sold to local canning plants. Another cost factor which lowered rand turnover was the rand-US dollar exchange rate used as the multiplication factor in converting US$-based airline rates into the local currency. “The International Air Transport Association (IATA) exchange rate,” said Froy, “moved from an average of R10.85 to the US$ in 2002 to R7.80 in 2003. “This represents a 28% strengthening of the rand in 2003.” A positive factor, however, has come from Zimbabwe’s current woes - with air cargo space constraints from that country benefiting SA forwarders, according to Froy.