Euro can cut kit costs
Euro can cut kit costs
FARMERS in the UK may pay significantly more for machinery than their counterparts on mainland Europe because manufacturers build in a safety margin to guard against adverse currency movements.
"If they are not prepared to sacrifice margin, makers have to build in a 2-3% increase, sometimes more, in machinery prices in non-eurozone countries," said managing director of German manufacturer Krone, Wilhelm Voss.
Speaking at the Sima show in France, Mr Voss pointed out that stable exchange rates in eurozone countries avoided the need for such a margin.
Refusing to join the k has caused untold damage to UK farmers through cheaper imports, more expensive exports and lower subsidy payments, claimed Mr Voss.
"Its crazy that so many British farmers have quit because of low incomes. Many say they cant even make a profit from milking 200 cows. But in Germany 80 cows still provide a reasonable living," said Mr Voss. "Its a question of if, not when, UK agriculture can recover from the damage it has suffered in recent years."
The k would begin to strengthen against the US$ and the yen when it became a physical currency next January, Mr Voss believed.
Support for the suggestion of a strengthening k came from Jean-Pierre Rosso, chairman of CNH, the product of the merger between Case and New Holland, which has global revenues of $10bn.
"The fundamental indicators point to the k reaching parity with the $. But we dont know when," said Mr Rosso.
"If the slow down in the US economy continues and the European economy keeps on track it could lead to a strengthening of the k."
For CNH it would significantly reduce UK manufacturing costs which would eventually benefit farmers and pave the way for an expansion of the companys tractor plant in Basildon, Essex, said Mr Rosso. *
Jean-Pierre Rosso: k will strengthen.