Agents Eye: Will the Euro fallout impact on the farmers of Yorkshire?

22nd May 2012

It’s the beginning of the agricultural show season, but the weather feels more like autumn and what with the falling Euro, I suspect most of us would prefer to go seek some cheap sun in the Med particularly if you have some Euros’ left over to exchange from last years SPS. My weekend travels took us to Suffolk and I couldn’t believe the impact of these heavy thunderstorms are having on potato crops with rows washed out and soil capping; and I suspect this cold weather will impact on crop yields slightly, unless we have the most amazing summer (here’s hoping).

One difficult question to answer at present is which currency to take the subsidy in this year. Looking at the exchange rate, it’s shocking to see that it’s just dipping under 80p and with what looks the inevitability of Greece bailing out of the Euro are we going to see this drop even further up to the September point? Probably, but punting on the exchange rate is just like selling your wheat forward, you never get it always right, but probably best to lock some away just to hedge your bets. Worst thing is to take in Euro’s and not hedge your bets, because it seems to be very expensive now to exchange the money back.

Will the Eurozone issues cause other issues? Well a large proportion of red meat production goes to Europe, with gross sales of livestock products of £2.3billion last year. But with sterling strengthening and the Europeans having tighter spending cuts, I wouldn’t be surprised to see the demand fall off at some stage in the year. There is bound to be an impact on price; the extent dependant upon demand nationally. It will be a true test of EBLEX marketing skills over the next 12 months and the value that they can deliver for the levy payers.

On the flip side, if your buying wind turbines from Europe for example, you will definitely be better off. Even with prices of manufacturing going up, the cost to the farmer is remaining constant which is good given the proposed drop in tariff rates from October this year.

Wind turbines are an emotive topic and some of you reading this may not agree with wind technology but the land occupiers are just re-acting to the Government schemes and encouragement of such development. The planning system is in place to protect the landscape and ensure sustainable development and I always encourage active engagement with the local community as there can be local community benefits on some schemes, depending on scale. Energy is a big part of a farming business and the soaring prices of energy are impacting many, particularly those more intensive systems. I would encourage those not involved in agriculture, to grasp the concept of the land being the farmer’s shop floor; it’s his factory that enables him to earn his living and produce the food that we all demand.

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