Euro devaluation to boost farmgate prices
The recent devaluation of the euro against Sterling and the US dollar will help improve farmgate beef prices, according to Irish Cattle and Sheep Farmers Association (ICSA) General Secretary Eddie Punch.
“A weaker euro should make Irish beef exports more competitive. And this is particularly the case where the UK market is concerned,” he said.
“I know that some of the plants may have forward sold product over recent weeks. But I am very hopeful that farmers should see these improved trading conditions translated into better cattle prices within days.”
Punch went on to point out that the euro has been significantly over valued for a considerable period of time.
“Last week’s decision by the European Central Bank to pump €1.5 trillion into the EU’s economy over the next year or so will also help to reduce the value of the Euro on the world’s money markets.
“Printing money is always accompanied by a reduction in the value of the currency involved. So, I believe that we are now looking at a medium to long-term downward trend, in terms of the Euro’s exchange rate value.
“The one down side for Irish farmers will be the enhanced pressure on oil and fertiliser prices. However, I think the envisaged increase in farmgate returns will outweigh this sting in the tail.”
Commenting on the falling value of the euro and its impact on Irish farming and agri-food, the ICMSA President, John Comer, indicated that the immediate impact was generally positive with Irish exports becoming more competitive especially into the UK.
“This increase in competitiveness might offset, to some degree, the fall in milk price experienced over the last eight months and certainly put the onus back on the co-ops, processors and various boards to deliver in terms of increased sales and marketing strategies,” he said.
Comer also noted that Ireland’s economy now seems to be on a markedly different stage of the economic cycle to that of other EU Member States. He agreed with those commentators who now stressed Ireland’s similarity with the so-called ‘Atlantic’ economies (US, UK, Canada).
“Whereas previously, the fall in the Euro’s value would have had a penal effect on the Irish economy through our high exposure to energy imports, the unprecedented fall in oil and natural gas prices means that the Irish economy is still ahead in this vital area,” he said.