Issue link: https://read.dmtmag.com/i/473131
www.goodfruit.com GOOD FRUIT GROWER MARCH 15, 2015 19 harvesting costs. That said, a continuation of low world oil prices would provide some cost relief to fruit growers. Lower oil prices are not entirely beneficial to the fruit industry. While oil is a cost to fruit growers, it is a major revenue source for many major foreign customers. The purchasing power of oil exporting countries has fallen since June 2014. Similar sharp declines in oil prices in the 1980s and 1990s led eventually to much lower purchases of fruit by the major oil-exporting countries like Saudi Arabia and the United Arab Emirates. That is likely to happen again if low oil prices persist. Another "price" that is having, and will have, a major impact on fruit exports is the exchange rate of the U.S. dollar against the currencies of our major markets and competitors. The exchange rate is just another term for the price one pays for another currency in buying or sell- ing U.S. dollars. Figure 2 shows the trade-weighted dollar exchange rate—that is, how the value of the U.S. dollar has fared against our major trading partners since 2011. Figure 2 indicates that products priced in U.S. dollars have, on average, become 23 percent more expensive for our major trading partners since the first quarter of 2011 due to big price spikes in 2011 and in the second half of 2014. This has impeded all U.S. exports. Conversely, products from other countries have become 19 percent cheaper. This will boost their sales in the U.S. market and give them a competitive edge over U.S. products in third-country markets. Because of numerous troubles in the world economy, the United States has become a refuge for many investors, so the U.S. dollar could continue to strengthen for several more years. In addition, the U.S. government is pushing for higher taxes and the Federal Reserve Board is planning to raise interest rates. • TJ MULLINAX/GOOD FRUIT GROWER Growers may see some cost relief if oil prices remain low. However, those low prices could impact fruit exports as countries that export oil may in turn be forced to lower fruit purchases. Figure 2 2011 2012 2013 2014 2015 Q1 Q2 Q3 Q4 85 90 95 100 105 110 Strengthening U.S. dollar How the value of the dollar has fared against the currencies of major trading partners. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS. (This trade-weighted value exchange rate is based on an index value of 100 in 1997.)