Forecast gives farmers little solace

25 November 2000

Forecast gives farmers little solace

By Andrew Shirley

THE Euro is unlikely to recover significantly against sterling next year, suggesting that farmers are in for another bumpy ride in 2001, claim analysts.

Farm business consultants Andersons predict a gloomy future in their Outlook 2001 publication which will be unveiled at this years Royal Smithfield Show .

“Unfortunately 2001 does not look like being the end of the depression for agriculture,” said the companys Francis Mordaunt.

Mr Mordaunt believes that Sterling will maintain its strong position in relation to the Euro as long as UK interest rates remain steady at 6%.

Currency markets also regard it as a safe haven during continued uncertainty in the Middle East and while world fuel prices remain high.

“Despite support from the European Central Bank [ECB] the best rate we can expect in the foreseeable future is for one Euro to be worth about 62p.

“If the ECB increases interest rates further the e could become more
attractive, but that would jeopardise growth within Europe, and is unlikely.”

Cereal producers hoping for higher prices next season are unlikely to take cheer from the report which says wheat prices are unlikely to top 65/tonne.

If the Euro weakens, a price of 50/t is not out of the question, believes Mr Mordaunt. But 80/t is possible if Sterling weakens and the world price increases.

But farmers cannot rely on higher prices to rescue them, he added.

“The sustained low price of maize on the international market means we are unlikely to see a large increase in the export of UK feed wheat.”

There is limited comfort for other sectors of the industry, although Mr Mordaunt believes that the corner has been turned for milk and pigmeat.

But he predicts that not much more than 1p/litre will be added to recent autumn price rises when new contracts are announced in the spring.

And pork producers will struggle to recoup the past two years losses.

Beef farmers face a difficult 2001 as increasing bureaucracy and uncertainty over the details of various assistance packages are yet to be resolved.

Mr Mordaunt said: “Overall the situation for agriculture is tough and we
do not see the trend changing in the next two or three years,” says Mr Mordaunt.

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