Irish mushroom growers may be forced “to opt out of the industry for a time” if the value of sterling against the euro continues to fall.
That is the warning from Thomas Martin, newly installed chief executive of the Irish Commercial Mushroom Producers’ Co-operative (CMP), the trade body representing some 90 per cent of the Republic’s growers. The crunch will come after Christmas, he predicted, when producers “will have to decide if it makes financial sense to carry on when you’re already losing money”.
In just over a month, he pointed out, the value of sterling against the euro has slid from 79p to 84p. “That represents a five to six per cent drop in the value of our mushroom exports to the UK. In a business such as this, operating on very tight margins, you cannot sustain losses on that scale indefinitely,” he said.
“If there is no recovery in the exchange rate, or if things worsen, I can see a situation in which some growers will cut their losses by taking a break from the industry for a while. Financially, they will have no other option. If that happens, compost manufacturers, retailers and a range of related trades will all be affected.”
The mushroom industry is worth more than €100 million (£84.4m) a year to the Irish economy, with some 90 per cent of the produce going to the UK market, mainly the multiples. At the height of the last slump in the value of sterling, a few years ago, the plight of Irish growers was eased by a retail price rise.
This time around, however, there is no such relief in prospect. On the contrary, according to Irish industry sources, the multiples are pressing growers for price cuts. “They want cuts from all suppliers to enable them to compete with discount stores,” said one industry source. “It’s crazy. As multiples, they operate a totally different model from the discount chains but they refuse to accept that. They want to keep their margins intact while cutting ours, and that would also affect second line suppliers such as packers and packaging manufacturers. It’s just not on.”
Martin agrees that cutting margins in the current climate is out of the question. “We don’t want a fight with the multiples,” he said. “We just want them to recognise the economic reality, that the industry is struggling to survive as things stand and squeezing us to the point of extinction is not going to benefit the consumer.”
The new CMP chief succeeds Brian O’Reilly, who had been doubling up as CMP chairman and acting ceo. He takes over at a particularly difficult time. Aside from the sterling slump, the Republic is in recession after the boom years of the Celtic Tiger economy, unemployment is soaring and a clampdown on credit by Irish banks is threatening businesses. “Yes,” says Martin, in a classic understatement, “the mushroom business is facing challenging times.”
No comments yet