We had a good harvest this
year. This means we will have plenty of product. We bought everything we could
from the farmers and moved it into our local warehouse. We planned to work
three shifts in the factory and organized for more storage space in Europe and
The production went
smoothly and we started shipping product. We had never covered our currency
exposure as we did not have enough volume. With the increased volume we thought
about it but did not want to incur the expense.
By the time the shipment
reached the warehouse the exchange rate had gone up which meant the wholesaler
either increased his price in dollars or we made less in our currency. The
difference was 4% and increasing. The situation with the Euro was worse.
By the time we finished
processing the year’s harvest, our currency losses were greater that the profit
from the increased production. If we wanted the breakeven we would needed to
increase our US sales 12% and Eurozone sales by 15%.