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The Long-run Impact of Different Exchange Rates on the Projected Agricultural Income of an Export Dependent Region of the UK

Author

Listed:
  • Joan Moss

    (Queen's University Belfast)

  • Seamus McErlean

    (Queen's University Belfast)

  • Ziping Wu

    (Queen's University Belfast)

  • Andrew Doherty

    (LMC, Northern Ireland)

  • Jos IJpelaar

    (University of Reading)

Abstract
This paper evaluates the effects of different exchange rate scenarios on projections for agricultural incomes and prices in a small highly export dependent region, NI. The modelling system used in the analysis is designed to capture the complexities of the relationship between exchange rates and agricultural prices and incomes. The system models not only the main agricultural sectors in NI but also the demand for and supply of agricultural commodities in the EU and beyond. This is important, given that NI is a price taker and the EU is the main export destination for its agricultural production. The analysis serves to underline the importance of exchange rates for the NI agricultural economy. When the euro is weak against sterling then agricultural sector incomes are substantially lower than when the euro is strong against sterling. Approximately, a one per cent weakening/strengthening of the euro against sterling is projected to reduce/increase aggregate net receipts in the dairy, beef and sheep sectors by one per cent. This means that exchange rate movements, which are outside the control of the agricultural community, have a dramatic affect on agricultural incomes in NI. This conclusion should be considered against the backdrop of a 28% drop (approx.) in the value of the euro against the pound that has occurred since 1995. The impact of exchange rate movements on producer prices appears to be less pronounced.

Suggested Citation

  • Joan Moss & Seamus McErlean & Ziping Wu & Andrew Doherty & Jos IJpelaar, 2004. "The Long-run Impact of Different Exchange Rates on the Projected Agricultural Income of an Export Dependent Region of the UK," Others 0409003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpot:0409003
    Note: Type of Document - pdf; pages: 19
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/othr/papers/0409/0409003.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • P - Political Economy and Comparative Economic Systems
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Z - Other Special Topics

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