Going Against the Grain: Why NZD/JPY Exchange Rates Matter

Many people tend to overlook how exchange rates shape the destinies of farmers, exporters, and the broader agricultural sector. Yet currency fluctuations—particularly the relationship between the New Zealand dollar (NZD) and the Japanese yen (JPY)—can have a substantial effect on agricultural trade. While conventional wisdom focuses on how a stronger currency can be advantageous for farmers by boosting capital and fostering new investment opportunities, it’s becoming increasingly clear that the story is far more nuanced. In some cases, a weaker currency leads to unexpected benefits, including greater export competitiveness and stronger buyer interest. In others, certain niche products maintain a stable foothold in international markets, despite turbulent exchange rate conditions.

This blog post dives into the complexities of the NZD/JPY exchange rate and how they play out in agriculture. We’ll examine recent trends in May’s trade dynamics, peer into the crystal ball for NZD projections in 2025, explore how exchange rates influence farmers’ decision-making, and challenge the long-held assumption that a stronger currency always spells good news for agriculture. Whether you are a farmer looking to expand into the Japanese market, an economist tracking macro trends, or a curious observer trying to understand the ripple effects of exchange rates, these insights can help illuminate the path forward.

---

May Insights: Steady as She Goes or Surprising Shifts?

Every May, industry observers keep a close eye on trade metrics, as they can set the tone for the remainder of the year. Although short-term fluctuations often draw the spotlight, a deeper look can reveal longer-term movements. This May, trade data between New Zealand and Japan has shown steady resilience, particularly in the agricultural space. While some observers expected economic headwinds might stall exports, niche segments not only sustained their positions but in rare cases also expanded their footholds.

One example comes from a small-scale operator in Canterbury specializing in organic honey and specialty honey-based products. Despite concerns raised earlier this year regarding shipping delays and currency volatility, this farmer experienced an uptick in orders from Japanese buyers. The JPY made purchasing these goods marginally more expensive for Japanese distributors compared to the previous year, but the honey’s unique quality and organic status appealed strongly to health-conscious consumers. It was the farmer’s first direct foray into the Japanese market after spending years differentiating the brand locally. Contrary to notions that currency pressures would deter expansion, this case highlights how strong product positioning can offset foreign currency costs.

May’s numbers reveal that farmers and exporters who carve out specialized niches—organics, premium grass-fed livestock, or heritage produce—fare better than those in traditional commodity-driven segments. Exchange rate woes can be buffered by strong brand identity and innovative marketing strategies. The conversation no longer hinges solely on the pluses and minuses of currency movements; rather, it’s about leveraging product uniqueness, meeting evolving consumer demands, and smartly navigating the complexities of cross-border processes.

Actionable Insight:

• Agricultural producers can boost resilience to currency fluctuations by carving out a distinct niche.
• Diversifying approaches to promotion in Japan—such as tapping into health, wellness, and sustainability trends—can override the negative impact of a strong NZD or weak JPY.

2025 and Beyond: The Uncertain Future of the Kiwi Dollar

Currencies are notorious for defying predictions, often shifting in directions economists do not foresee. As we look ahead to 2025, forecasts suggest the NZD may strengthen moderately against a basket of currencies due to domestic economic recovery and global demand for high-quality agricultural products. However, recent history teaches us the peril of overreliance on traditional forecasts. If we rewind the clock to 2019 or 2020, few predicted the scope and complexity of the global economic disruptions we’ve since encountered. Currency experts made confident assessments about the NZD’s trajectory, many of which never materialized.

Japan, a major consumer of New Zealand’s dairy, beef, and produce, is itself grappling with multifaceted economic changes. Aging demographics, evolving dietary preferences, and environmental considerations shape Japan’s import needs. Nevertheless, net food import demand remains robust, offering opportunities for New Zealand producers who can adapt to new consumer tastes, such as premium dairy alternatives or sustainably sourced protein. A potential rise in the NZD could either amplify or diminish these opportunities, depending on which product category is under consideration.

When looking to 2025, the real lesson is to avoid placing too much faith in any single prediction. Instead, adopting scenario-based planning allows farmers and exporters to prepare for multiple pathways. Industry players can keep an eye on macroeconomic indicators—such as commodity price trends, Japanese policy on food imports, and world events that may affect shipping routes—to remain agile. After all, forecasts that disregard the potential for sudden market jolts or regulatory changes risk leaving farmers unprepared.

Actionable Insight:

• Embrace flexible strategies that can pivot with currency fluctuations—locking in partial hedges for those worried about volatility.
• Stay attuned to consumer trends in Japan, especially as health and sustainability shift more strongly into view.
• Recognize the limitations of forecasts by adopting scenario planning and regularly reviewing market indicators.

The Exchange Rate Equation: Calculating Farming Profitability

It’s easy to think that a stronger NZD translates to bigger gains for agriculture. While it’s true that buying new equipment or investing in productivity improvements can become cheaper if the NZD climbs, the export side of the equation is a different story. When the NZD appreciates against the JPY, New Zealand products can become more expensive for Japanese buyers, risking a potential drop in demand. In contrast, a weaker NZD means Kiwi farmers see increased revenue if they convert yen back into NZD, even if the face value of sales appears lower.

Dairy is one sector particularly sensitive to exchange rate swings. As one of New Zealand’s top exports, dairy products rely on consistent foreign demand. When the NZD soars, Japanese importers may hunt for alternative suppliers from countries with more favorable currency conditions. Conversely, kiwifruit exporters have sometimes benefited from a surging NZD thanks to their premium market positioning and consumer loyalty in Japan. Even if prices are a little higher, brand recognition for New Zealand kiwifruit and the reputation for quality keep demand stable.

For any farmer eyeing profitability, the best approach often mixes currency risk management with a product strategy that can endure rate fluctuations. Strategies like currency hedging, targeting multiple export destinations, or forming partnerships with importers who appreciate quality over a bargain-basement price, can help protect profit margins. The currency equation is never straightforward, but the potential rewards for those who navigate its complexities are significant.

Actionable Insight:

• Monitor currency movements closely and consider financial instruments like forward contracts or currency options.
• Cultivate strong relationship marketing—customers who value your brand might be less price-sensitive.
• Diversify export markets to avoid overexposure to one currency situation.

Turning Assumptions on Their Head: When a Weak Dollar Is Win-Win

One often-overlooked advantage of a weaker currency is how it transforms the competitiveness of New Zealand’s agricultural products. In contrast to industries like manufacturing that might rely heavily on imported components (where a weaker currency raises costs), agriculture can become more appealing to foreign buyers when the dollar dips. For example, consider a region in the North Island producing free-range eggs and poultry. When the NZD declines, these products become more accessible to Japanese retailers, leading to a potential lift in overseas orders. Not only do Japanese consumers benefit from a better price, but farmers in New Zealand gain from higher volumes of sales.

Interestingly, this scenario creates win-win dynamics. Japanese grocery chains, continuously searching for new suppliers to fulfill consumer demand for high-quality protein, find it easier to negotiate with New Zealand farmers whose currency disadvantage ironically becomes a negotiation advantage. This synergy fosters relationships that often endure even when the currency adjusts upward again. As a result, farmers who calmly ride out the fluctuations may find themselves better positioned in the market.

Nevertheless, a weaker currency is not a cure-all. Farmers who rely heavily on imports—such as feed, fertilizer, or even certain technologies—might see their operating costs climb. Striking the right balance between benefiting from a weaker NZD on the export side and paying more for critical inputs is central to a successful currency strategy. The upside is that markets such as Japan reward quality, and those farmers willing to adapt quickly can preserve margins despite shifts in operating costs.

Actionable Insight:

• Evaluate your supply chain to understand how currency shifts might affect input costs.
• Strengthen long-term partnerships with Japanese importers, capitalizing on the price advantage and building loyalty.
• Don’t overlook the importance of product quality, which can sustain relationships across currency cycles.

Overcoming Strong Currency Roadblocks

It’s tempting to think that a strong NZD automatically means a thriving agricultural sector because New Zealand has more purchasing power. However, farmers focusing on standard commodity items like basic milk powder or unbranded fruits can face stiffer competition in export markets. When the New Zealand dollar soared in previous cycles, certain exporters found it challenging to maintain competitiveness, as buyer budgets stayed fixed while Kiwi goods crept up in price.

One telling example involves a group of orchardists who saw a boom in mango exports to Japan limited by the surging NZD some years back. Initially, the orchardists had built a niche market on a promise of top-tier quality and unique taste. Yet, when exchange rates drove prices beyond what Japanese distributors felt comfortable paying, sales slowed. Rather than strengthening their brand to justify the higher price, the orchardists tried to compete solely on cost—a battle they inevitably lost. The experience underscores that a strong NZD, combined with inadequate product branding, can lead to lost market share.

By contrast, farmers who do manage to invest in cutting-edge technology or secure lucrative import deals for advanced machinery can benefit from a strong currency. Still, the net impact for many remains mixed, highlighting the importance of strategy. Being mindful of how brand identity, product uniqueness, and strong exporter-importer relationships can offset the negative aspects of a high NZD is vital.

Actionable Insight:

• Combat potential downturns in demand by emphasizing unique product attributes and robust brand stories.
• Align with Japanese buyers’ needs: focus on premium, high-demand products rather than commodity items vulnerable to price competition.
• For those reaping benefits from cheaper inputs, invest in process improvements or marketing that can insulate you from future currency volatility.

Time to Challenge the Status Quo: Debunking the “Strong Currency Is Always Good” Myth

A stubborn narrative persists in agricultural communities: a strong currency equals universal prosperity. Real-world data tells a more complicated story. While certain segments may flourish when the NZD is robust—particularly those importing machinery or investing in new technologies—others find their margins squeezed. Simultaneously, a weaker NZD can open doors to marketplaces that might otherwise seem impenetrable, granting Kiwi farmers a decisive pricing edge.

Consider the case of a Marlborough-based exporter focused on premium dairy alternatives, including oat milk and plant-based yogurts. When the NZD appreciated significantly in 2017, this exporter struggled to maintain a competitive price point against other suppliers in the Asia-Pacific region. Japanese retailers started replacing the Marlborough products with cheaper alternatives from countries whose currencies were less inflated. What turned the tide was the exporter’s pivot toward showcasing the nutritional science behind their products and the environmental benefits tied to their production methods. This repositioning let them recapture some of the lost ground, demonstrating that adaptability and strong branding could matter more than an absolute exchange rate figure.

“Breaking free from the one-size-fits-all thinking about exchange rates can lead to new possibilities.”

By carefully analyzing your specific context—whether that’s a dairy farm, orchard, or honey business—each agricultural producer can glean insights about where a stronger or weaker currency might present an advantage. With the right mindset, exchange rate shifts become opportunities to rethink strategy, rather than dead ends.

The Road Ahead: Rethinking Currency Impact for a Resilient Future

As we’ve seen, currency movements reverberate across every facet of the agricultural sector. But not all outcomes are set in stone. A strong NZD could spur valuable machinery investments, yet hinder cost-sensitive export segments. A weaker NZD might boost demand in Japan but raise input costs for farmers. And overarching all these scenarios is the unpredictability of global events, macroeconomic forces, and shifting consumer demands. Rather than clinging to prefabricated ideas about whether a strong or weak currency is best, the practical approach lies in understanding your own position: your products, your supply chain, your target market, and your competitive advantages.

Farmers who successfully navigated May’s NZD/JPY terrain often had two common threads. First, they anticipated volatility and diversified either their offerings or their partnerships. Second, they communicated value beyond price. Whether it’s highlighting organic credentials, forging broader relationships with distributors, or aligning with Japan’s sustainability goals, a well-articulated narrative remains crucial.

Ultimately, the key to thriving in the complex world of currency fluctuations is flexibility and awareness. Stay informed about both domestic policies and Japanese economic trends. Challenge conventional assumptions about what currency states mean for your particular agricultural trade strategy. Above all, remember that forecasts, though informative, are never a guarantee. By staying watchful, nimble, and open to evolving opportunities, Kiwi farmers can advance confidently—no matter which way the NZD/JPY wind blows.

Your Turn: How Will NZD/JPY Trends Shape Agriculture?

As currency dynamics continue to unfold, farmers, exporters, and policymakers all have vital roles in shaping the future. Have you experienced exchange rate swings that boosted or hindered your agricultural pursuits? Are you cautiously optimistic or concerned about NZD trends heading into 2025? Share your thoughts and experiences in the comments. The only certainty is change, and by pooling collective insights, the agricultural community can remain resilient and ready for whatever comes next..

Join the Discussion