Michal Slawski, Horticulture Division, Bord Bia
All exporters to the UK from the Euro zone have been struggling with the weakness of sterling, and mushroom producers in Ireland are no different. The UK is a very important market for Irish mushroom producers, with around 70% of production being exported, all to the UK. Sterling had been trading in a range of 65 to 70 c for almost 5 years up to the end of 2007. It traded at just under 80c for most of 2008 before falling to almost Parity towards the end of 2008. Currently, sterling is running at then falling again to its current rate of 87c against the euro.
Euro/Sterling Exchange rate, Jan 2008 to date (1 Euro =)
Source: xe.com
The last three months have been a rollercoaster ride for mushroom producers and traders, due to the extreme rapidity with which the market has been changing. At current exchange rates margins are very tight. Producers and marketing companies have been working hard to solve the problems caused by the low value of sterling.
In the short term, producers have managed to ameliorate the situation somewhat with a significant proportion of producers securing forward cover in early January, taking advantage of the temporary strengthening of the pound. In addition, as a large portion of the mushrooms retailed in the UK are sourced from the Euro zone, retailers have increased prices to secure supplies. The value of the UK retail market for mushrooms for the three months to Christmas was up a solid 5% over the same period in 2007.
For further information email: michal.slawski@bordbia.ie