Farm Ireland

Saturday 24 February 2018

Sterling slump costing farmers millions per week

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Louise Hogan and Margaret Donnelly

The slide in the value of sterling is costing the Irish agri-food sector millions per week, farming leaders have warned.

After a week that saw sterling weaken to 93p against the euro, the IFA says that jobs will be lost and low-margin growers heavily dependent on the UK market could go to the wall.

IFA economist Rowena Dwyer estimates the impact of weak sterling is about 15c/kg for beef exports.

"This is a loss to beef farmers of close to €2m per week. Farmers cannot keep going at current loss-making prices," she warned.

"The last time we saw this level of sterling weakness was in 2009. In the midst of domestic and international economic collapse, farm incomes fell by 30pc, averaging €12,000 that year."

Employers' organisation IBEC has demanded "urgent action" on the exchange rate situation.

"Failure to do so will severely damage our exports, result in substantial job losses and weaken our trading position in the post-Brexit environment," said IBEC food and drink director Paul Kelly.

IBEC says 88p to the euro is the tipping point for food and drink exports to the UK, which were worth €4.1bn last year. However, the decline has accelerated in recent weeks. The body warned a sustained period at 90p could hit food exports by €700m.

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Mr Kelly called for an enterprise stabilisation fund in the upcoming Budget for low-margin but viable businesses such as mushrooms that have been hardest hit by currency fluctuations.

Food chain

"As we face into Budget pre-negotiations, currency fluctuations are pressing back down the food chain to the primary producer and we are looking at ways we can address that in the context of the Budget," said Mr Kelly.

ICMSA president John Comer has warned that processors will pass back the impact of a weaker sterling on to farmers.

"It is important that measures are put into the Budget to help deal with the volatility at farm level," he said, outlining a farm management deposit scheme that allows farmers to put away money tax-efficiently for a bad year.

The IFA has called for a slice of the CAP crisis reserve fund and direct support from the EU for producers. Low-cost loans are also a priority in its pre-Budget position.

Agriculture Minister Michael Creed said the Government was "acutely conscious" of the weakness of sterling as they face into negotiations for the Budget. "This is pressing back down the food chain to the primary producer and we are looking at ways we can address that in the context of the Budget," he said.

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