04 August 1997
NFU confronts George over Pound
By Boyd Champness
NATIONAL Farmers Union president Sir David Naish has written to Bank of England Governor Eddie George to express concern at the impact of the rise in Sterling on UK agriculture.
Sir Davids letter claims that the agricultural industry is being badly affected by Sterlings strength in two ways – the loss of competitiveness and consequent lower prices received for exports; and the revaluations of the Green Pound hitting farmgate prices.
“This has meant that the UK producer prices of all agricultural products had fallen in June 1997 in excess of 15%, and look likely to fall further. Farming income will be acutely lower in 1997 and as a consequence, investment is also likely to fall sharply this year,” Sir David writes.
Sir Davids letter to Eddie George, in which he requests a meeting to further make his point, comes on the eve of yet another Green Pound revaluation on August 20, when the green rate is expected to deteriorate by almost 5% to 68p per Ecu. The UK green rate has deteriorated by 14% against the Ecu from June 1996 to June 1997.
The August 20 revaluation wont affect arable aid payments, which were fixed on July 1, but could affect livestock headage payments, which will be fixed on January 1.
Agriculture makes a significant contribution to the UK economy, with the value of exports of food, feed and drink worth over £10m in 1996. But all export industries – not just agriculture – are suffering at the hands of rising Pterling. In August last year the Pound was worth about DM2.3, but it is currently worth about DM3.
In the past, the NFU has appealed to the Government to seek revaluation compensation from the European Union for UK farmers. To date, about eight EU member states have successfully received EU currency compensation for their farmers.
However, the NFUs appeals have fallen on deaf ears. The NFU claims that the Government is reluctant to pursue a compensation package because it requires a certain amount of financial input from its own coffers.
With the Government slow to seek compensation for its farmers, Sir David has now turned to the Bank of England, which is responsible for adjusting UK interest rates.
“Several of the main agricultural sectors, including cereals, lamb, pork, butter and cheese, export 20-40% of their total production – but the strength of Sterling is undermining their competitive position,” Sir David writes.
Sir David added that, although the export market for beef was currently closed off, Sterlings rise still badly affected this sector as imports came into the UK at lower prices. Beef imports from the EU were 45% higher in April 1997 than in the same month a year earlier.