Green £ devaluation
lends extra support
TWO devaluations in the space of three days have given a lift to livestock and arable farmers but offers little comfort to intensive pig and poultrymen…………….page 21
BRUSSELS has implemented a 25% cut in export subsidies for carcass beef and live cattle sold outside the EU which could swell supplies and weaken internal prices, warn farm organisations……page 21
MEAT traders report a decline in sales and a weak-ening of finished cattle prices as BSE publicity hits demand………………….page 22
Pigs flying high
PROSPECTS for pig prices are favourable as latest census figures point to a tight-ening of EU supplies in 1996………………………page 22
Whiter than white
MILK group the Northern Milk Partnership has launched a new quality assurance scheme to emphasise the hygienic standards of its liquid product…………….page 24
WITH just three weeks remaining in the quota lease period there has been a definite upturn in values, with most auctions seeing about 12.5p/litre for 4% butterfat this week………………..page 24
JOHN Dalton has invested £80,000 in new slurry handling equipment for his contracting business at Gelli Garneddau, our adopted farm in west Wales………….page 26
PROBLEMS in the beef trade have rubbed off on cull cows, with markets reporting lower throughput and reduced prices………….page 33
By Philip Clarke
UK farmers have received an early Christmas present, with green exchange rates devalued twice in the space of three days.
After months of relative stability the green £ (used to convert Brussels money into national currency) was devalued by 1.21% last Saturday (Nov 18) and again by 0.27% on Tuesday. The combined effect was to lift farm support prices by 1.5%.
Pressure in the foreign exch-anges forced sterling to an all-time low against the deutschmark last Friday (Nov 17), enough to trigger the devaluation.
Further devaluations have not been ruled out, although sterling was showing considerable resil-ience in the run-up to next weeks Budget, in which chancellor, Ken-neth Clarke, is tipped to cut taxes.
For cereal growers the immediate impact is "muted", according to Home-Grown Cereals Authority economist Sanjay Saraf. For even though the November intervention price has risen from £101.69/t to £103.21/t as a consequence, the grain markets are trading so far above this "floor" as to be unaffected.
In theory the weakness of sterling which caused the devaluation should have already benefited UK cereal prices by improving their export competitiveness. In practice, values have actually slipped after the recent "bull run" and are £2 off their peak at £122 to £124/t ex-farm for spot movement.
The green rate changes are also potentially beneficial to area aid next season. Although the actual payments are determined by the rate on July 1, this weeks changes alone would lift English cereal aid from £269.17/ha (£108.93/acre) to £274.15/ha (£110.95/acre). Set-aside would rise from £340.94/ha (£137.98/acre) to £347.26/ha (£140.53/acre).
There is plenty of time for these gains to be wiped out if sterling strengthens enough to trigger rev-aluations. And it is not impossible that EU farm ministers could cut area aid for 1996, although there are no such proposals at this stage.
In the livestock sector the dev-aluations will give a further boost to suckler cow and beef special premiums for 1996. These depend on the green rate applying on Jan 1.
If todays rate remains unch-anged suckler cow premium will be worth £124.11 a head, compared with £114.43 in 1995, with beef special premium at £93.09 a head, compared with £85.82 this year. Extensification premium would be worth £31.03, up £2.42 taking account of the 11 devaluations so far in 1995. *