Onions — a data point on exports
05/03/2013 § Leave a comment
I’ve been looking at horticultural crops and their export opportunities. It can be a fickle business. You work hard to develop a specific market, and overnight the rules can change or a new competitor comes in. Tastes and preferences are different around the world and change over time, so fruit varieties that sell well this year in Europe might not be suitable in five years or in Asian countries.
Horticulture in New Zealand is an export industry. Wine, onions, potatoes, apples, cherries, etc. — they sell some on the domestic market but lots overseas. Mainly, we aren’t big players on international markets — not like dairy — so there is lots of room to grab niche markets but also the danger of being squashed.
Being an export industry, horticulture is affected by the exchange rate. I was looking at onion exports and thought they looked a bit like the inverse of the exchange rate. Here’s the graph:
The correlation coefficient between the two series is -0.54, which is reasonably strong. Yes correlation is not causation and no I haven’t run any statistical tests and yes it’s a short data series. But, at first blush it does suggest that the high exchange rate is hindering this export industry.
As the title suggests, I’m just offering this as a data point. When we talk about the impacts of exchange rates and the OCR and Auckland housing and manufacturing, this is the sort of thing going on out there in the economy.