The sterling exchange rate is constantly in the news due to the BREXIT effect on the value of sterling.  Since June, sterling is approximately 20% lower in value vs the dollar and the euro.  Since the US and Europe are two of our main trading partners, this will mean a 5ppl increase in milk price and £25/T increase in corn prices.

Historically over the last 25 years, farming’s fortunes can be tracked quite closely vs the euro exchange rate.  When sterling falls in value, commodity prices and BPS/SFP subsidies rise in sterling terms, and vice versa.

Total Income from Farming and Currency, 1990 to 2015 – Source: DEFRA

With the fall in sterling, we are beginning to see prices rise.  Are we now in for a period of improved prices, irrespective of the weather and market forces?  That may well depend on the future value of sterling, which will depend on the political and economic fallout in the next two years from BREXIT.

I will not even hazard a guess as the experts are unsure, as currently sterling value seems to be driven by political views rather than hard economic data!

To discuss further, please contact Gerard at gerardfinnan@fcgagric.com