Farmers reassured by beef price, despite UK vote

Irish beef farmers are not phased by currency speculation following the Brexit vote as the sterling-euro rate has remained relatively stable, said ICSA beef chairman Edmond Phelan.

As beef exports to the UK are based upon the sterling-euro rate, beef farmers are not impacted by pound-dollar concerns.

While the pound hovered above $1.33 for most of Tuesday, analysts vary hugely on their dollar-pound projections, the most extreme being that sterling could fall to parity with the dollar by the end of 2016.

“The talk of sterling collapse is over-done,” said Mr Phelan.

“There is too much sensationalism about the pound sterling hitting a thirty-one year low when, in fact, this relates to the exchange rate with the US dollar. From a beef exports point of view, the relevant exchange rate is sterling-euro.

“Here, we see that the value of sterling has fallen to about €1.20 since the Brexit decision. However, the rate of exchange throughout 2016 has generally been in the range of €1.25 to €1.30. So in fact, the purchasing power of sterling is down 4% to 8%,” he said.

“Moreover, throughout most of 2012 and 2013, sterling was worth less than it is now. It is true that sterling appreciated in 2015 but it was very clear that the benefit of strong sterling was not passed back to Irish beef farmers at that time.

“Farmers will remember this was demonstrated by the huge gap that opened up whereby Irish farmers were getting up to €1/kg less than their British counterparts.”

The ICSA beef spokesman said that beef farmers have not been “spooked” by the post-Brexit vote market analysis. Instead, they are focused on the scarcity of cattle going to marts due to the plentiful supply of grass at this time of year.

“While quotes are hard to get at present, indications seem to suggest that €3.95 is being got for steers and that heifers are making €4.05 €4.10 [per kg],” Mr Phelan observed. “Cows are a more difficult trade but that’s down to the time of year and extra culling in dairy herds.

“Our advice as always is to sell cattle when they are fit and not to be coerced into selling hastily,” he said.

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