Dáil Éireann Debate, Wednesday - 13 July 2016
36. Deputy Thomas Pringle asked the Minister for Agriculture, Food and the Marine the measures he will put in place to manage the reduction in the value of sterling for farm enterprises to assist them in maintaining their income; and if he will make a statement on the matter. [21294/16]
View answerThe most immediate concerns for farm enterprises and exporters arising from the UK decision to leave the European Union centre on euro-sterling exchange rates. While the fall in the value of sterling against the euro is significant, it is not unprecedented. Nevertheless, a sustained period of currency volatility could be of concern. In that regard, the Central Bank of Ireland has established contingency plans to deal with market volatility surrounding the referendum result. The bank will engage with the Department of Finance and individual financial institutions with regard to potential risks. Actions by the European Central Bank and other global actors will be monitored closely.
In addition, I have asked the relevant agencies, including Bord Bia, Enterprise Ireland and BIM, to provide practical guidance to small and medium-sized enterprises. Last week, Bord Bia announced a number of measures to support food and drink businesses. These measures include managing volatility impacts, providing consumer and market insight, deepening customer engagement and extending market reach. The aim is to help companies maintain their competitiveness. Similar support is being provided by Enterprise Ireland as well.
I will continue to monitor the situation closely, in particular through the consultative committee of stakeholders that I established recently and which met for the first time last week. I will also ensure that the response of the agencies is fully co-ordinated through a contact group established under the Food Wise 2025 high level implementation committee.
While it is true, I suppose, that fluctuations in the sterling exchange rate are not unusual, what has been especially difficult recently is the extent of the depreciation in such a quick period and the impact this is having on businesses.
The Minister referred to what would happen if this continued for a sustained period. What constitutes a sustained period in terms of the actions of the Department? There is a need to be ready to intervene to assist businesses in a practical way, perhaps by supporting their exports rather than advice and leaving them to rely on Bank of Ireland to deal positively with people. This needs to be managed closely. I am somewhat concerned with the reference to the fluctuation lasting for a sustained period. The Department needs to be able to move quickly to react and support businesses in a very practical way, rather than simply offering market advice and support.
Since the counting of the votes in the United Kingdom and the announcement that the UK was leaving, my Department has been proactive. Bord Bia and BIM have had engagement with their stakeholders and the companies they work with that export to the UK. The feedback of the high level implementation group on Food Wise 2025 has been interesting. The group includes agencies such as BIM, Enterprise Ireland, Bord Bia etc. Some feedback included concern emerging from their client companies. There was also feedback from their producers to the effect that price was an issue but also that quality and sustainability of the product was recognised as a significant factor in our favour.
While we need to be vigilant in respect of all of these matters, particularly in respect of currency fluctuations, we need to be careful not to panic people in this situation as well. I appreciate that certain sectors are significantly exposed and we are working with these to try to manage the volatility in currency exchange rates. However, there are opportunities on the other side in dollar-denominated markets. They offer significant export opportunities in other areas that we are trying to exploit in terms of new market opportunities.
The key point is that other opportunities take time to develop. It takes time to open up those markets and feed in to them. There have been anecdotal stories of businesses having orders cancelled since the Brexit vote. This indicates the immediate impact. We need to be ready to step in and protect these businesses to keep them going if the current situation continues to take hold.
I am concerned about the Minister's reference to a sustained period of fluctuation. What is a sustained period? If the devaluation continues or if it stays at this level for a longer period, how quickly can the Minister act? What can he actually do in practical terms to assist people?
It is important to remember that outside of a Brexit context we have been in this scenario with the euro relative to sterling for six of the past ten years. This is something the industry has managed previously. I appreciate that it is painful for some as well as threatening in terms of feasibility for others. While we have to watch this space in terms of the range of policy instruments that we may have to invoke, at the moment I am satisfied in terms of my Department's reach to its client companies, through BIM and Bord Bia. We are monitoring the situation and keeping in contact not only with those companies but with substantial purchasers of Irish exports in the UK to try to ensure that we navigate successfully the immediate impact of the Brexit decision in currency fluctuation. On the other hand, we are preparing a range of contingency measures in respect of negotiating strategies etc. I am liaising with my counterpart in Northern Ireland in respect of cross-Border issues that will arise in the context of negotiations as well.
I am satisfied that the dedicated unit in my Department and the reach the agencies have with their customers as well as the contingency planning under way in consultation with the Department of the Taoiseach are helping us to position ourselves in the best possible way to deal with the immediate and medium term issues that will arise in the context of the Brexit negotiations.
