Farmers and exporters jointly demand sterling protection scheme

A STERLING equalisation support scheme is being jointly sought by the Irish Exporters Association and the Irish Farmers Association.

It follows claims that the collapse of sterling is putting 23,500 jobs at risk in Irish manufacturing and service companies which have €7 billion in export sales to Britain.

The IEA and the IFA said such a scheme was needed to prevent widespread loss of exports and jobs, particularly in the agri-food sector, which is heavily dependent on the British market.

In their proposal to the Government, they suggest the National Treasury Management Agency (NTMA) act as guarantor, as it has a requirement to purchase sterling, and could act as a counter party to the exporting businesses which are selling sterling. The key requirement is that the exchange rate for the exporter would be capable of being fixed at £0.80 to the euro. IEA president Liam Shanahan said Ireland’s traditional exporting industries including agri-food are being undermined by the 20% depreciation of sterling since the end of 2007 and unless action is taken by the Government to implement a sterling equalisation support scheme, 13,500 jobs in export companies will be lost and a further 10,000 jobs would be indirectly affected.

IFA president Padraig Walshe said export credit insurance has been of huge assistance in the past to agri-food exporters in particular, as they pushed into diverse international markets.

Mr Walshe said sterling fell from £0.73 against the euro at the start of 2008 to £0.98 at the end of the year and is now at about £0.90.

“At £0.90 average exchange rate to the euro in the last few weeks, €1bn of our €3bn of agri-food exports to Britain will be vulnerable, and 4,400 jobs are under imminent threat,” he said.

Mr Walshe said while the proposed scheme may involve some cost to the exchequer indirectly through the NTMA, the cost of doing nothing would be much greater.

The Government’s own figure is that every 1,000 people being made redundant costs the exchequer €11m.

Therefore, the loss of 23,500 jobs would cost the exchequer about €260m, he said.