Be ready to trade in Euros, warns NFU

By Philip Clarke, Europe editor

BRITISH farmers should prepare to trade in Euros now rather than wait until the UK joins the single European currency.

“The Euro is not just another currency,” says NFU chief economist Siôn Roberts.

“After a smooth and uneventful launch, the view being taken by some seems to be that, since the UK is not a member, its business as usual. Such complacency is dangerous and misses the whole point of economic and monetary union.” According to a new strategic document*, prepared by the NFU economics department and obtained by Farmers Weekly, that point is to make the single European market more efficient, by improving price transparency, reducing currency costs and removing exchange rate volatility. This will speed restructuring of the EU agri-food industry, with larger, more concentrated businesses better placed to compete in the liberalised world market of the new millennium. While welcome, this poses a great threat to farmers, says the report. “Further rationalisation could put agriculture in an increasingly weak marketing position.”

Siôn Roberts: Complacency over the single currency is dangerous

Farmers not prepared to deal in Euros could be at an even greater disadvantage, as they have to contend with currency transaction costs, while their customers look increasingly for pan-European suppliers.

“A strategy to deal with this challenge, whether by co-operative marketing or other solutions, is essential,” says the report.

But the Euro also provides opportunities for UK farmers, especially when sourcing inputs, such as agrochemicals and machinery, from a Euro-wide supply base.

“Already UK retailers are asking their suppliers for their lowest Euro price,” says Mr Roberts. “And Continental farmers are searching the whole of the Euro zone for the best deal.”

There will also be opportunities to take out Euro loans, says Mr Roberts, though care is needed to deal with the exchange rate risk.

“The Euro constitutes a real change in the business environment throughout Europe,” says Mr Roberts.

“We are not suggesting farmers all go out and open Euro accounts tomorrow. But it is essential the whole industry starts to think about the strategic implications if it is not to be taken by surprise.”

* Practical and strategic implications of EMU for the UK agri-food industry is available by phoning 01768 861801. Click here for a summary