Farming still strangled by strong Pound
By FWi staff
WEAK commodity prices and a strong Pound coupled with a weak Euro are still proving a deadly cocktail for farmers and the UK farm machinery industry.
The Assessment of chief economist of the Agricultural Engineers Association, Chris Evans, was blunt: “Tractor sales will be down by 5% to 10,400 units by the end of this year, compared with 10,969 for 1999.”
Speaking at the Royal Smithfield Show, Mr Evans said prospects were looking more encouraging until the autumn.
“We had hoped the worst was over as far as low commodity prices were concerned. Then the weather took a hand.”
Two factors which would reverse the downturn were the strengthening of the Euro against Sterling and firmer world commodity prices.
“I believe we are at the bottom of the cycle and things can only improve,” said Mr Evans.
But he thought it would be six months at least before most farmers acted on the investment decisions they could be making at Smithfield this week.
A key factor in translating those plans into reality would be the strength of the Euro.
“Some economists are forecasting the Euro will strengthen against the Pound by as much as 15% within the next 12 months.
“Others are more conservative and I feel the figure will be nearer to 5-10%.”
Support for those views came from show chairman and managing director of Rustons Engineering, Richard Ruston.
The strength of Sterling (coupled with a weak Pound) is draining our industry. Every adverse 1p shift in the Pound-Euro rate takes 1m out of UK farmers pockets,” he said.