Farmers are not prepared for scale of referendum fallout, says insurer Aon
Published 29/06/2016 | 02:30
The Irish farming industry is unprepared for the major consequences that will ensue as a result of the UK's decision to leave the EU.
Commodity prices, extreme currency swings and disruption to exports are just some of the major challenges facing the sector as a result of last week's vote, according to Ciara Jackson, head of the food & agri-business practice at insurance giant Aon.
The UK accounts for 41pc of all Irish food exports.
"Last week's shock result has the potential to severely challenge the competitiveness of the Irish food & agri-business sector. The UK's importance as an export destination for Irish produce means that the collapse in the value of sterling (making Irish exports more expensive) could particularly hurt lower margin businesses where profits can quickly swing to losses," Ciara Jackson said.
Aon released its Food, Agribusiness and Beverage Risks Insight report today.
Its shows that 58pc of the companies surveyed viewed fluctuation in exchange rates as one of their major risks, but many are not prepared for the challenge.
"For the first time we have data showing the top risks that companies in this crucial sector of the Irish economy face. What is clear from the research is that companies are risk aware but risk unready, and in some cases worryingly so. A key issue these days is the increasing inter-connectivity of risk," Ciara Jackson said.
The already struggling dairy sector may be especially exposed.
The removal of EU milk quotas in 2015 means that milk production levels across the EU have risen, with Ireland forecast to see a volume uplift of 50pc. Falling prices will be a challenge to the dairy industry which accounted for over €3.2bn in exports last year.
Agri-food is vital to Ireland's economy, with 23,000 people employed in the sector and exports of €10.8bn in 2015.