Government Must Provide Support to Cope with Sterling Fluctuation

Speaking at the Iverk Show in Kilkenny today, IFA President Joe Healy called on the Government to support farmers through the difficulties caused by Sterling fluctuation as a result of Brexit uncertainty.

Joe Healy said, “The Irish agri-food sector is the most exposed sector to Brexit, with over 40% of exports going to the UK. Maintaining the closest possible trading relationship with the UK must be an absolute priority in the Brexit negotiations.”

In the more immediate term, he said, Government must protect the agriculture sector against the sharp devaluation of Sterling arising from Brexit uncertainty, which is having major repercussions for farmers.

The EUR/GBP exchange rate has now crossed the crucial 90p mark and sharp fluctuation is likely to continue given the uncertainty around Brexit negotiations.

The IFA President said a number of support measures are required and must be targeted at farmers.

  • The agriculture sector is facing continuing competitiveness challenges arising from the weakness of Sterling as a direct fallout from the UK Brexit decision. This October’s Budget should support new lower cost loan products for farming through the SBCI, to fund both ongoing working capital requirements and for on-farm investment. The Government must also provide additional funding for farm schemes.
  • Government should be making a strong case at EU level for greater flexibility and an increase in EU State Aid limits. This would give greater scope for Government to directly support affected sectors, such as farming and the agri-food sector, whose competitiveness versus their EU trading partners has been undermined due to the Sterling weakness.
  • Sterling devaluation has had major repercussions for the mushroom sector, which exports 90% of its produce to the UK and has already lost a significant number of producers due to the initial impact of Brexit. Government must seek direct support at EU level for mushroom producers through CAP Market Support measures, which are designed to address disturbances caused by significant price drops.
    The IFA President also warned that while the devaluation of Sterling is having an impact on the beef sector, farmers believe that beef factories are using the uncertainty around Brexit and the weakness of Sterling to opportunistically cut beef prices.

He said Minister for Agriculture Michael Creed cannot allow these cuts to continue, “The Minister must insist that there is competition in the trade and market returns are fairly passed back to farmers. In addition, he must ensure that any increased market access delivers real price gains and stability back to farmers.”

“The meat industry is seeking funding to help defray the impact of recent devaluations however if any funding is provided it must go directly to farmers” Joe Healy said.

“The meat factories have been more than passing back any cost of devaluations to farmers. The beef price in the UK Is the equivalent of €4.36/kg including VAT while factories are quoting €3.80/3.85/kg here. They continue to make profits while farmers are struggling,” Joe Healy concluded.

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