Australia’s market advantage in the dairy, fruit, cropping and lamb sectors has been eroded by a weakened American economy, with the US government crippled by an internal political war.

The national currency has performed strongly against the American greenback during the past fortnight, breaking the $1.10 mark late last week.

Victorian Farmers Federation president Andrew Broad said Australia’s strengthening currency was eating at the nation’s competitive edge against other exporters.

He told The Standard the robust Australian dollar was not due to bolstered domestic conditions but the uncertainty surrounding the American debt debate waged by US President Barack Obama and his political opponents.

“When we reached parity, we seemed to be able to keep pace because demand for Australian produce was still there,” Mr Broad said.

“However, the $1.10 mark means we’re becoming more and more expensive in the eyes of overseas buyers. The citrus industry is really taking a hit at the moment but we’re yet to see a noticeable impact on dairy.

“I think the (dairy) sector will be looking at the dollar very closely over the next few weeks.”

American indecision over whether to raise its debt ceiling resulted in the Australian dollar reached a post-1983 float high of $US1.10 last week, before easing off slightly after speculation the Reserve Bank would drop interest rates.

United Dairyfarmers of Victoria (UDV) district councillor Basil Ryan said the strong exchange rate was disappointing for primary producers, given that international demand for milk was at record levels.

He said the dollar would only soften when the US government managed to come to some form of agreement on debt management.

“It certainly is (concerning),” Mr Ryan said yesterday.

“The disappointing thing about the economic situation we’re in is that there has been very good demand for Australian milk on the overseas markets.

“If the Australian dollar was back around the 85 US cents mark like it was a few years back, the dairy industry would be in the midst of a real bonanza.”

The last time the Australian dollar traded at $US1.10 was three decades ago during the 1981-82 financial year.

Mr Ryan said the south-west dairy sector was not as reliant on exports in the early 1980s as it has been for the past decade.