Posted on Wednesday 11 March 2015 by Ulster Business
John Henning, Danske Bank's Agricultural Relations Manager, Angela McGowan, Chief Economist at Danske Bank UK and Sam Butler, chair of the Guild of Agricultural Journalists.
Northern Ireland’s agri-food sector is primed for growth in the coming years but needs to face the threat of sterling’s continued strength.
That was the message from a breakfast hosted by Danske Bank at the Kingspan Stadium in Belfast where economist Angela McGowan warned of continued weakness for the euro against the pound in the coming months.
“The euro’s weakness is the biggest threat to the agrifood sector this year,” she said, pointing to the steady slide in the value of the single currency over the last year.
It currently stands at just 70p, down from around 82p at the same time last year and from over 90p in 2011.
The currency is important to the sector for two reasons.
Firstly, much of Northern Ireland’s agri-food sector is exported to the Republic, and indeed to mainland Europe.
A weaker euro means the value of those exports to Northern Ireland companies which use sterling falls because exporters are forced to lower their prices in order compete with others from euro nations or raise prices and risk losing trade.
Secondly, the EU payments made to Northern Ireland’s farmers each year, although paid in sterling, are worked out on a euro basis. The weaker euro will mean the total value of those payments will fall.
The economist said the currency fluctuation could mean more of a focus on selling Northern Ireland’s exports to GB.
Danske’s Head of Agricultural Relations John Henning said the sector is “strong, successful and capable” but needs to be more confident in its ability.
He pointed to an increase in TIFF – total income from farming - of over 100% between 2006 and 2014.
And he said the bank has a 50% share in the agricultural market, but pointed out a traditional lack of appetite for borrowing by the farming community.
A total of 45% of farmers don’t borrow at all while only 9% borrow over £100,000.