By Robert Harris

ECONOMIC and monetary union came a step closer this week after receiving government support, prompting calls for farmers to prepare for life under the Euro as soon as possible.

The UK could, in theory, join the European single currency as early as January 2002. This could speed the rationalisation of agri-business and weaken the marketing position of farmers, says the NFU.

The government launched its national changeover plan on Tuesday to encourage UK businesses to prepare for the Euro. Prime Minister, Tony Blair, said that planning to stay outside the Euro-zone would betray the national interest.

“We can no longer afford to pretend that the Euro does not exist or that Britain should not actively prepare for it,” he said in a statement to the House of Commons.

UK to meet conditions

While maintaining UK membership was not inevitable, Mr Blair said the UK was likely to meet the relevant economic conditions (laid down in 1997) shortly after the next election.

The plan does not reveal a starting date for transition. But it sets out a timetable of events once that date is set. “Clearly it is useful to know how long after a referendum the process will take. Banks, the retail sector and big businesses have a lot of work to do,” says Siôn Roberts of the NFU.

Farmers will escape much of the direct cost of converting. Many will only have to upgrade their accounting systems.

But farmers must think along more strategic lines, especially when it comes to marketing, Mr Roberts warns. “If, by committing money to the public sector transition the government convinces businesses in the agricultural supply chain to move up a gear, then farmers will have to respond more quickly, too.”

Farm input prices and produce values could come under pressure as businesses look to cover the costs of EMU transition, he says. And quicker entry into the single currency could speed restructuring of the agri-food industry and the weakening of agricultures marketing position.

Co-op marketing

“We will have to deal with big, pan-European businesses,” says Mr Roberts. Farmers should consider co-op marketing to protect incomes, he adds.

On the plus side, such industry rationalisation will enable farmers to source inputs from a wider supply base, which should reduce costs, says Mr Roberts.

  • Germany has warned that a collapse of next months talks to agree on EU finance reform could damage the Euros prospects. The comments reflected the countrys frustration over this weeks Agenda 2000 talks, which stalled today (Friday).