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Falling pound: what it means for your farm business

The fall of sterling has had a mixed impact on the agricultural sector

 



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Falling pound: what it means for your farm business

Since the vote to leave the European Union, the pound has been falling against the euro and dollar.

 


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Pound

With sterling slumping almost 20 per cent in recent months, some analysts have suggested it still has some way to go.


But the impact is mixed for UK farmers, with some sectors seeing a positive impact and other inputs going up. Here we look at the winners and losers.


Machinery

Machinery

James Woolway, managing director of Opico, which imports machinery, said the weaker pound was good for business.

 

"All our prices have to go up. While farmers have the Basic Payment Scheme, it is augmented by a weaker pound.

 

"I would rather have a weak pound, expensive machinery and farmers with money than cheap machinery and farmers with no money.

 

"I cannot sell machinery at any price if farmers do not have any money in their pockets."


Red meat

Red meat

Stuart Ashworth, Quality Meat Scotland head of economics, said positives were currently outweighing negatives.

 

"It is good in the context of trade for animal products, whether this is beef, sheep or pigs. It has made imported goods more expensive.

 

"It has made lamb in particular attractive on European market and cattle prices have been helped by more expensive Irish beef.

 

"Weak sterling will have an effect on feed and fertiliser. Anything we buy-in is more expensive, but there is a degree of lag on prices.

 

"At the moment, the good is outweighing the bad and support for primestock prices is outweighing increasing costs."


Grain

Grain

Jonathan Lane, trading director at Gleadell, said the market was being entirely driven by currency.


"The UK has an exportable surplus of wheat and barley and the price we can sell it at dictates farmgate prices.


"The fall in sterling makes us more competitive.


"If we go back to October 3 when the euro exchange rate was about €1.15 to the pound, we were trading at £127/tonne. Here we are today at about €1.10 to the pound and it is £132/t.


"For rapeseed, it has an even bigger impact. For each cent change, it equals about £3/t on farmgate prices. This is a change of £15/t when the price in euros has hardly changed."

 


Heating oil

Mark Askew, chief executive of Federation of Petroleum Suppliers, said increased prices had to be passed on to consumers.


"As most oil trade is in dollars, the dollar/pound exchange rate has a significant effect.


"It has to be passed through the whole supply chain, so we are seeing increases to consumers.


"In the latest comparison of heating costs we have, it still represents good value for money.


"Heating oil is the cheapest form of energy right now and has been since January last year."


Fertiliser

Fertiliser

AHDB’s latest fertiliser market output report showed fertiliser prices have been increasing due to the weak pound.


The report said: "Potash prices have seen a sizeable uptick in GBP terms, with the muriate of potash price reaching £0.30/kg K2O in August.


"Price increases between June and July in the UK are indicative of the weakening of the domestic currency. In dollar terms, prices have stayed level month-on-month in July, remaining at an eight-year low.


"Since the domestic currency has seen some stabilisation, it is expected prices will begin to track dollar trends again more closely."

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