28 January 1999
NFU warns over Euro isolation

BRITAINS farmers and food processors could find themselves out on a limb if the UK continues to stay outside the Euro zone, according to a study by the National Farmers Union (NFU).

The study concludes that European farm businesses could be able to cut costs and reap economies of scale much more easily than the UK.

These advantages would be exacerbated by trade liberalisation taking place in the European Union in the consolidation taking place in the European food industry

The NFU identifies transparency in the pricing of inputs, whether combine harvesters or agro-chemicals, as offering one advantage to agricultural companies operating within the single currency.

By contrast, UK companies would suffer the disadvantage of being subject to the uncertainty of currency fluctuations and the costs of transactions and hedging.

A further disadvantage would be higher interest rates in the UK.

The NFU is urging the UK government to switch to Euros for payments to farmers under the common agricultural policy.

This would enable them to get some benefits by taking advantage of cost-savings inside the single currency.

But the report says the UK has to make a more fundamental commitment if it wants to stay competitive on European and world markets.

  • Financial Times 28/01/99 page 10