Four chances in five that things will get better for farmers after Brexit vote

According to bookmakers, there is only one chance in four that the UK will vote today in favour of leaving the EU (in other words, you can get a 300% return by betting on Brexit).

The bookies say there are four chances in five that the UK remains. The difference between the two probabilities allows the bookies make some profit.

But no-one else will make any money out of Brexit; instead it has already cost millions, regardless of the outcome of today’s vote.

It added hugely and expensively to the uncertainty which always hovers over food markets.

For example, if the vote had been on May 23 instead of June 23, and the outcome was as expected (the UK remaining in the EU), Glanbia might not have cut their milk price for May by a cent per litre.

Lakeland Dairies might also have held the price, instead of cutting it 0.5c.

Dairygold Co-op has held its May price unchanged, and it looks like the four West Cork co-ops will follow suit, with Drinagh and Lisavaird first to announce there is no change in price for May milk deliveries.

May is the peak milk month, making the milk price for the month a very important indicator to under-pressure dairy farmers that there is light at the end of the tunnel after the long-lasting market slump.

Drinagh Co-op, consistently among the top payers, not only held their May milk price (despite a 0.5c/l by Carbery, which processes the milk from the four West Cork co-ops); the co-op also committed to this price to the year end.

They and the other co-ops who didn’t cut the price were happy to bet against the one chance in four that the UK will leave the EU, in order to give a badly needed confidence booster to farmers, many of whom are producing milk below cost, due to the slump in dairy markets.

However, there are now signs of an end to that slump - unless, of course, the UK votes to leave the EU.

Regardless of how Brexit would ultimately affect our dairy exports, it would cause a considerable market shock for quite some time, at best.

But such is the nature of business decision making, made all the more complicated in co-ops, where protecting balance sheets can be in conflict with protecting the primary raw material producers.

On the bright side, everything points to a big British vote in favour of staying in the EU, and to co-ops that cut May milk prices making up for that when the time comes to announce June prices.

Getting Brexit out of the way can lift farming fortunes across the board, with the prospects of live cattle exports to Turkey, a new €25m scheme to help sheep farmers, and Chinese demand lifting the pig sector out of its severe price slump.

The betting on live exports to Turkey looks good for farmers, now that Ireland has been added to the Turkish list of approved countries.

Agriculture Minister Michael Creed said Irish commercial interests were already making contact with Turkish buyers, and it was hoped that contracts would follow in the short term.

IFA president Joe Healy said Turkey imported 380,000 head in 2015, mostly from South America, and up to 120,000 head from France, and is a destination capable of paying very good prices.

The immediate requirement would be for younger stock, mainly bull weanlings up to 12 months of age and up to 300kgs from the suckler herd.

Beef exports are threatened by Mercosur and TTIP trade talks in the background; however, successful trade agreements are probably a longer shot than even Brexit.

It looks like pig farmers can safely bet on continuing market recovery, after eight straight weeks of EU pig price rises, thanks mainly to a shortfall in Chinese pork production, generating demand that the USDA predicts will last into 2017.

There’s something for sheep farmers to look forward to also, in next October’s budget.

However, the new sheep scheme with a budget of €25 million must first be approved by the European Commission.

No need to worry, that makes it a much better bet than the UK leaving the EU.

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