Scotland-NFU Scotland dismisses Irish farmers claims.
SCOTLAND-NFU Scotland has dismissed calls by Irish farmers for a "sterling equalisation scheme" to counteract the effects of the pound’s weakness against the euro.
Farmers throughout the UK are currently enjoying a boost from the currency exchange rate, which makes British livestock products and cereals highly competitive in international markets.
But farmers in Ireland, for which the UK is the top export
destination, say they are losing out massively and have called on their government for help.
James Withers, chief executive of NFU Scotland, said: "As fellow farmers we have great sympathy for Irish producers who are struggling with the lowering of prices. However, we do not agree with the principle of governments intervening unilaterally in the European single market and oppose the creation of schemes to do just that. We have had to make that very clear to our own government.
"For the many years when the value of sterling was high against the euro, NFUS did not call for a UK state-sponsored scheme to protect us from imports or to give aid to exports. We had to suffer lower prices during these times because we work in a single European market."
However, Padraig Walshe, the president of the Irish Farmers Association, following discussions with government officials in Dublin, has warned of "massive" job losses unless action is taken soon.
He said: "A competitive farming and food industry could be one of the few bright spots in an otherwise dismal economic climate. Farming and the food industry and services provide 300,000 jobs and foreign earnings worth 8.7 billion (£8.2bn), which is 17 per cent of our net exports.
"In 2007 Ireland had a competitive rate of exchange with sterling at 68p. But in the course of 2008 a deliberate policy by the UK government to gain competitive advantage, sterling fell from 73p at the start of last year and to 98p at the end of 2008."
The UK is the number one destination for much of Ireland’s food exports, with the trade in beef amounting to 96,700 tonnes in the first eight months of last year, which was up by 4,000 tonnes in the comparable period of 2007. Considerable quantities of beef are still being imported into the UK. Neither Irish farmers or processors are making a margin, but UK consumers have been the winners at a time when supplies of British prime beef are lower than for many years.
Brendan Smith, the Irish minister of agriculture, will come under pressure today when he addresses the IFA annual meeting in Dublin to introduce a package to aid the farming sector. Brian Cowen, the prime minister, will hear more of the same when he speaks at the association’s dinner.
The UK view is that Brussels will block any attempts to manipulate currency markets and rates of exchange. However, Matt Dempsey, editor of the Irish Farmers Journal reckons there are sound precedents that could allow Dublin to act.
He He said: "The danger of competitive devaluations was always recognised before the euro removed the problem from Ireland and continental Europe. But the old principle of ’monetary compensatory amounts’ is still totally valid.
"The old system would have placed a direct devaluation levy on British agricultural and food imports from Ireland, as well as to the general euro area. The system was administered by the member state, but on behalf on the EU. Given the huge importance of the British market, this issue must not be let die."
Ireland is not alone in feeling the pain of the high-value euro. Portugal, Spain, Italy and Greece are all experiencing problems with exports – and not just agricultural products. No country has to date ever left the euro and that seems an unlikely prospect. But the pressure is now on the European Central Bank to lower interest rates to make the euro more competitive against sterling and the dollar. That may well happen in February, according to informed sources.
