Fresh euro demand

30 October 1998

Fresh euro demand

FURTHER calls have been made for the government to make Brussels payments available in euros next year.

The ministry must ensure the option is in place after Jan 1, when European Monetary Union starts, said Gordon Summerfield, president of the Dairy Industry Federation.

CAP payments in sterling would put UK operators in a position of great uncertainty, since their value would be converted into sterling using daily rates of exchange against the euro. Expensive hedging facilities would be needed, which would take the profit out of trading.

"The solution is to make payments directly in euros. We look to MAFF to ensure this option is in place as soon as possible after the start of EMU."

Kate Timms, head of agricultural crops and commodities director at MAFF, said ministers had noted the keen interest of many parties in euro payments.

"The government as a whole is committed to facilitating the use of the euro by UK business in the post-January period, and MAFF ministers will be announcing their conclusions soon on whether the facility of the euro will be made available to the agricultural sector after that date."

Mr Summerfield dismissed the extra cost of administration, which farm minister Nick Brown mentioned in Brussels last week (Business, Oct 23). "MAFF had jolly well better get the extra money. Many companies trade in Europe and will need to trade in euros. I would have though it would have been automatic."

Mr Summerfield also warned that the battle for future profits would be fought in liberalised open markets brought about by relaxed trade barriers, which would be fully accessible to efficient world operators.

Farmers and processors needed to work together if the UK were to attract the investment needed to turn the industry into a global competitor. Two obstacles – Milk Marques selling round and the milk quota system – were harming prospects, he said. &#42

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