25 Oct 2016
ACTION BY EU COMMISSION CRUCIAL FOR MUSHROOM SECTOR BESET BY CURRENCY PRESSURES POST-BREXITEconomics, Horticulture, IFA in Brussels
IFA President Joe Healy has called on the EU Commission to provide support for mushroom producers who have been badly hit by the duration and extent of the sterling depreciation arising from the UK decision to exit the EU.
Joe Healy said, “The sudden and sustained depreciation of sterling, which is as a direct result of the UK vote, has had a very negative impact on the price returned to producers here in Ireland. Mushroom contracts are negotiated in sterling and prices are forward agreed, generally for contract periods of up to 12 months. Mushroom producers cannot renegotiate the price they are receiving in response to the sterling decline because the contracts are for a fixed time period”.
The IFA President said that direct support should be provided to affected producers through the CAP Market Support measures. “Article 219 of EU Regulation 1308/2013 establishing a common organisation of the markets in agricultural products outlines the support measures that can be provided in the event of significant market disturbances. The sharp decline of sterling, arising from the UK vote, is a market disturbance which has occurred swiftly and unexpectedly, and has resulted in significant price falls.”
In addition, IFA believes that consideration should be given to the temporary easing of restrictive State Aid rules, which are limiting the support that can be targeted at the most exposed sectors.
The Chairman of the IFA Mushroom Committee Gerry Reilly said the EU Commission must provide exceptional support for the mushroom sector, for which an external political event has had an immediate and negative economic impact.
Irish growers, employing 3,500 people, produce 70,000 tonnes of mushrooms worth €120m at farm gate, of which 80% is exported to the UK multiples, through their producer group Commercial Mushroom Producers (CMP). For the majority of Irish growers, 100% of their production is exported to the UK, where they hold almost 60% of the UK multiple market.
Current mushroom prices reflect the favourable €/GBP exchange rate of the second half of 2015 (when £1 sterling was worth an average of €1.39). Since the Brexit vote, sterling has weakened from £0.76:€1 to £0.90:€1, a weakening of over 15%.