Weak pound put in perspective
5 June 2000
Weak pound put in perspective
KEEP recent improvements in farmers fortunes in perspective, cautions a leading agricultural economist.
A 9% fall in the strength of sterling in the past month has led to speculation that farming could be turning the corner after the worst recession in 60 years.
Farmers have long argued that a strong pound makes it difficult to compete in the export market and draws in cheap imports.
But Sion Roberts, chief economist for the National Farmers Union, said recent weakening of the pound should be seen in its wider context.
“It sounds like a lot because the pound has comes down by 9%, but it had gone up by the same amount in the previous two or three months,” Mr Roberts told the BBC Radio Four Farming Today programme.
“You have to try to keep these things in perspective.”
He pointed out that agriculture has struggled against a pound which has been rising since 1996.
Mr Roberts said farmers would feel the benefit on levels of subsidies and prices.
Arable farmers, whose subsidies are set in July, could feel the benefits first if the pound continues to weaken.
And if the trend continues, livestock farmers will profit when their subsidies are set in January.
The effect on prices would take longer to feed through in intervention, which to some degree affects the market price, explained Mr Roberts.
Competitiveness will also improve as the pound weakens, although that will take some time to feed through to the market.
Mr Roberts predicted that improving world markets and strong fundamentals which suggest the pound is over-valued could assist recovery.
“If that is indeed the case, it will indeed mark a fairly major turning point in the fortunes of farmers in the UK,” he said.
In April the Organisation for Economic Co-operation and Development reported that world agricultural markets had taken a significant turn for the better in the past 12 months.