Farmers feeling impact of ‘Hard Brexit'

November 9th, 2016 8:05 AM

By Southern Star Team

Rose O'Donovan - Letter From Brussels

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IFA president Joe Healy has called on the European Commission to provide financial support for the ailing Irish mushroom sector which has been badly hit by currency shifts in its key UK market as a result of ‘Brexit’. 

In a statement issued on October 25th, the Athenry farmer said ‘the sudden and sustained depreciation of Sterling … has had a very negative impact on the price returned to producers here in Ireland.’ Healy explained that ‘mushroom contracts are negotiated in Sterling and prices are set in advance, 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 sector employs around 3,500 people across rural Ireland and produces 70,000 tonnes worth €120 million at the farm gate – 80% of which is exported to UK retailers. For the majority of Irish growers, 100% of their production is destined for the UK market, IFA figures indicate. 

Around 10% of Irish mushroom growers have already gone out of business, it seems, as the 20% decline in the value of Sterling is hitting producers and processors hard. 

Speaking with this correspondent on the eve of a trade mission to Vietnam and Indonesia, the EU Farm Commissioner Phil Hogan confirmed that the Commission is currently examining a scheme put forward by the Irish government seeking to introduce a €150 million low-cost loan facility scheme for Irish farmers (interest rate of 2.95% per annum). The facility would use the country’s €11 million national envelope as part of the €350 million fund for exceptional adjustment aid (July farm aid package) as leverage, allowing farmers to bridge the liquidity gap.


Currency shifts 

In the immediate aftermath of the UK’s shock referendum result on June 24th, a Bord Bia survey revealed that around 40% of Irish food and drink exporters expect their sales to decline following the UK’s decision to leave the EU. At the time, exporters said that exchange rate volatility would be a key risk, while a third of companies in the sector said they would seek out new market opportunities. Ireland’s food and drinks industry is heavily reliant on the UK market, which accounted for 41% of total exports in 2015, valued at nearly €4.5 billion. 

The accelerated fall in the value of Sterling against the euro will have a negative impact on Irish exporters over the coming months and into 2017. Exporters in the agri-food business are already feeling the strain and jobs are in jeopardy.


Tough challenge

Dealing with the implications of Brexit will be one of the key challenges for the newly-appointed chief executive of Bord Bia, Tara McCarthy, who will take over the reins from the outgoing Aidan Cotter in early 2017. The current chief executive of Bord Iascaigh Mhara (Irish seafood development agency) brings a wealth of domestic and international experience to the post. 

Against a backdrop of falling commodity prices, a slump in demand from China and oversupply on the market which has been exacerbated by the ongoing Russian food import ban, Tara McCarthy – who is originally from Clonakilty – is taking over the reins at an important and challenging time for the Irish agri-food industry.

• Rose O’Donovan is editor of the Brussels-based publication AGRA FACTS & a regular contributor to the video platform

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