More volatility on menu for NI agri-food sector
I attended the Danske Bank’s Agri Economic Outlook Breakfast in Belfast this morning with fellow members of the Guild of Agricultural Journalists. The Kingspan Stadium was the sporty setting for a sobering start to the event at which Danske Bank warned that the NI agri-food sector is facing “multiple threats” in 2016, in particular the pressure on milk prices and uncertainty around a UK exit from Europe – the so-called ‘Brexit’ – of particular concern. The EU is a major export market for NI’s food manufacturers and the bank said a ‘Brexit’ could potentially hinder growth in the local industry if agriculture does not remain a priority sector.
But light at the end of the tunnel was offered by Danske Bank’s Head of Agricultural Relations John Henning who said that with the challenges of 2015 continuing into 2016, the agriculture sector must play to its strengths, be ambitious and look at innovative new ways of dealing with global price volatility.
Questioning on the pros and cons of ‘Brexit’ was as hearty as the breakfast. But the Bank reassured us that that local farmers and producers are extremely resilient to change and that it is committed to supporting them as they strive to succeed in 2016.”
Danske Bank Chief Economist Angela McGowan, agreed that the global picture is mixed for the agri-food industry as a whole. She said: “Danske Bank is forecasting growth of around 1.9 per cent for the agriculture sector over the course of the next year and around 1.2 per cent in 2017. We expect the global economy to grow by 3.3 per cent this year and 3.5 per cent next year as the world’s largest economies continue to grow. Chinese growth is expected to stabilise at 6.7 per cent and the US should grow by roughly 2.5 per cent. It is encouraging too that one of our main export markets, the Republic of Ireland, is now the fastest growing economy in Europe.”
“However, we have had a volatile start to the year in global markets and the strength of sterling against the euro means there continues to be pressure on local exporters. Milk prices, like most commodities, continue to be depressed and that shows no sign of changing in the short term. However Danske Bank anticipates commodities in general to stabilise in the second half of this year.
“A potential Brexit could also have a bigger impact here than in Scotland, England and Wales as we in Northern Ireland get more money per capita from Europe than them. We estimate the direct financial implications at £371m a year in terms of lost CAP and Structural funds. It has not yet been made clear that agriculture, in the event of a Brexit, will be a priority sector for the UK government.”