Business

Exchange rate movements put brakes on north's farms sector

VOLATILITY in global commodities and the fluctuating exchange rate are combining to apply the brakes to the north's stellar-performing agri-food sector, a top economist warned yesterday.

"Farmers and producers can expect to see a marked slowdown over the next year or two," Ulster Bank's senior northern number-cruncher Richard Ramsey told a briefing of agricultural and business journalists yesterday.

"The fact that sterling is continuing to strengthen against the euro means there is ongoing pressure on prices, and there will clearly be some losers in the farm sector," he warned.

"More generally, the global economic context has seen trade restrictions on Russia and the ongoing uncertainty around a potential Greek default, which has introduced further volatility to the market.

"Yet the fundamentals of a burgeoning middle class in developing countries continue to provide support for a positive long-term outlook," he added.

Mr Ramsey was speaking as Ulster Bank - which next month is headline sponsor of the Balmoral Show for the seventh year running - underlined its commitment be a long-term partner of Northern Ireland's agri-food sector by pledging £1.5 billion in business lending.

"Agri-food in Northern Ireland bucked the trend and largely prospered over the last number of years while the general economy was in turmoil.

"But now that the overall economic situation is improving here, ironically it has gone the other way on farms.

"It's staggering what has happened with oil prices and exchange rates over the past year and it has seriously affected the sector's

competitiveness," Mr Ramsey said.

The bank's senior agriculture Manager Cormac McKervey said that over the course of the last year, Ulster had been working closely with its customers to ensure that they are well prepared for the potential for volatility.

"Changes to the single-farm payment and the strength of the pound relative to the euro mean that exports to our main trading partner, the Republic of Ireland, are less price-competitive, which has huge presented challenges for the industry," he said.

"However, farming is a business that focuses on longer-term time horizons, and we work on that basis. Our new pasture loan, and our dedicated food & drink proposition are designed to assist customers in planning ahead and looking forward with more confidence."

* WARNING: Ulster Bank's Richard Ramsey, left, and Cormac McKervey