Ireland’s leading beef and dairy processors are braced for higher costs and margin reductions as the sterling continues to be volatile in the currency markets.
Although the pound rallied towards the weekend, the pound hit record lows early last week in response to the UK government’s so-called mini-budget financial plan.
Asked how the currency turmoil is affecting consumer demand for Irish beef on UK supermarket shelves, Meat Industry Ireland (MII) Director Joe Ryan said:
“The weakening sterling exchange rate is a significant concern for MII members exporting beef, particularly in the context of the many headwinds the sector is currently facing.
“Given the importance of the UK market for Irish beef exports, anything that affects the competitiveness of our supply is another challenge.
“This comes at a time when the sector is also seeing reduced consumption of high value cuts like steaks due to inflationary pressures on consumer spending power, coupled with sharp increases in business costs like energy and transport,” he said.
On the milk side, Dairy Industry Ireland (DII) director Conor Mulvihill warned that across the pond, Irish milk prices “must rise” in response to currency fears.
“While Irish dairy has diversified significantly away from the UK market, it remains an important market for us.
“Essentially, Irish milk prices must rise in the UK market at a time when normal wages are not keeping pace with inflation already rampant there.
“This in turn will result in demand destruction for consumers and a reduction in margins for Irish processors if left unchecked.
“There has been no impact on UK demand for Irish dairy at this time. In fact, milk export numbers for 2022 are up significantly as pre-Brexit dairy stockpiling has disappeared from the system.
“The Bank of England is directing the impact of sterling’s depreciation on the final price of goods and this is taking between nine and 12 months to materialise, so Irish dairy will be looking at alternatives in other markets whilst obviously trying to improve theirs maintain market share in the UK.
“We also don’t see any growth in domestic milk supply in the UK, so they will remain dependent on imports such as Irish dairy to meet domestic demand – particularly in the catering sector,” he concluded.
https://www.independent.ie/business/farming/agri-business/agri-food/irish-beef-and-dairy-processors-brace-for-margins-hit-amid-sterling-volatility-42041633.html Irish beef and dairy processors are bracing for margins to be hit by sterling volatility