Sterling to crash to €1=£1.10 in hard Brexit
Ibec has warned of "bleak" times ahead for Irish exporters due to exchange rate alone if there is no Brexit deal.

With one week to go to a crucial vote on the Brexit withdrawal ageement in the UK's House of Commons, the business lobby group Ibec has warned that the sterling exchange rate could fall between 10% and 25% if the deal is rejected, plumetting to an "unprecedetented" €1=£1.10.

Bleak picture

"Recent forecasts by the Bank of England paint a bleak picture for Irish exporters in the event of a no-deal Brexit," Ibec economists wrote in the organisation's latest quarterly economic outlook this Monday. "At these levels, large numbers of Irish firms would not have sufficient margins to supply the UK market without complete price pass-through to British consumers." This would make Irish agri-food products much more expensive for British buyers.

By contrast, maintaining close economic ties under the proposed withdrawal agreement is forecast to push the value of sterling down by 2% to 5% compared to 2018, with this year's average exchange rate remaining at the current level of €1=£0.90. This is the limit over which most agri-food exporters surveyed by Bord Bia last year said they would experience serious difficulties.

The early part of 2019 is likely to be a period where margins will be squeezed for

many Irish exporters

"As it stands the early part of 2019 is likely to be a period where margins will be squeezed for many Irish exporters," Ibec economists warned.

Aside from exchange rate, the authors also highlighted the uncertainty surrounding the UK economy itself, which is the largest market for Irish agri-food exports. "It is very difficult to measure the impact that Brexit will have on the UK economy as a country has never left such a large trading block before. Therefore, there is no precedence to estimate the magnitude of the shock or the speed of adjustment," they wrote.

Support measures

In Ireland, Ibec noted recent contingency plans published by the Government and the European Commission for a hard Brexit, but said they should be expanded with much-needed information on how this would be managed on the ground. "We urge them to work collectively to bring forward more meaningful measures to support business," the group said.

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Beef and dairy bosses demand Brexit action from Creed
Imposing tariffs on exports would "cripple trade", meat and dairy factory representatives have warned.

Beef and dairy bosses braced for a hard Brexit have handed a list of demands to Minister for Agriculture Michael Creed.

With 65 days remaining to salvage a Brexit deal, the nightmare scenario of a no-deal is becoming ever more likely.

A delegation including Aurivo’s Aaron Forde, ABP’s Martin Kane, Larry Murrin of Dawn Farms Foods, Cormac Healy of Meat Industry Ireland and Conor Mulvihill of Dairy Industry Ireland, met with Minister Creed on Tuesday.

Dairy co-ops want dual British-Irish status for Northern Ireland milk, export refunds and other trade supports. They called for a freeze on tariffs in the event of a no-deal Brexit and direct income aid for farmers.

Meat factory representatives warned that if tariffs are imposed on exports to the UK “it would cripple trade”, with the additional danger of sterling devaluation in a no-deal outcome.

They called for extra resources to ensure speedy border checks and increased ferry capacity and routes for direct shipping to the continent.

While European Commissioner for Agriculture Phil Hogan reassured farmers Brussels is poised to swoop to their aid, a Commission spokesman confirmed a hard border is inevitable unless the British reach an agreement with the EU or delay their withdrawal.

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EU 'stands ready' to support farmers - Hogan
European Commissioner for Agriculture Phil Hogan has assured farmers that Europe is planning for all possible outcomes from Brexit negotiations.

European Commissioner for Agriculture Phil Hogan has moved to reassure farmers that the EU stands ready to intervene in markets to protect prices in the event of a hard Brexit.

“We have to prepare for the worst. The European Union stands ready to help Irish and EU farmers in the event of a hard Brexit,” Commissioner Hogan said, addressing a crowd of more than 250 farmers at the Kilkenny IFA annual dinner dance on Saturday night.

“We have the tools ready to intervene, including Aid to Private Storage, intervention and a revision of state aid rules,” he added.

Slow

His words will help give farmers comfort that, while Minister for Agriculture Michael Creed has been slow to commit to supports, plans for a safety net at EU level are well advanced.

Hogan reassured farmers that the EU is ready for all scenarios, but warned that the Government must also be ready and ensure the necessary infrastructure is in place to ensure products can continue to move through ports.

Gloomy

While a no-deal Brexit paints a gloomy picture, vice president of the European Parliament Mairead McGuinness is reminding farmers that it could be avoided if a deal is reached between the EU and UK. But, she says, plans are being put in place to deal with a no-deal scenario.

“There are deep concerns about the consequences,” McGuinness told the Irish Farmers Journal.

“We will need to be looking at how you are going to support a vulnerable sector, that will call for money.

"All of those things will have to be discussed in the short period of time before the United Kingdom leaves.”

Lamb prices rocketing ahead
The trade for all types of lamb is strong currently boosting farmers' confidence in the sector.

Factory agents are scouring the country in the hunt for slaughter-fit lambs.

Prices have hardened significantly over the past number of weeks.

Farmers are securing €5.25/kg to €5.30/kg, with specialised feeders negotiating in excess of €5.40/kg for lambs.

The mart trade is booming for all types of lambs currently.

Fleshed factory-fit lambs are selling over €120/head, with €125/head common for lambs weighing over 50kg.

The store lamb trade is on fire, with prices of €2.50/kg to €2.80/kg and higher being recognised for hill-bred lambs.