Growers facing price pressure as euro dips

'If there is any fluctuation on foreign currency it puts the supply chain under pressure from imports,' says HTA president.

Poinsettia: exchange rate effect
Poinsettia: exchange rate effect

The weak euro is leading to price pressure on horticultural produce, industry figures are warning.

The euro has dipped because of the Greek economic crisis and the exchange rate for sterling rose to its highest level for almost seven years last month - EUR1.41.

HTA president Stan Green said the issue is particularly sensitive with Christmas crops such as poinsettia and trees. "If there is any fluctuation on foreign currency it puts the supply chain under pressure from imports.

"It's not great as far as the exchange rate is concerned. We're starting to see price pressure from the continent. In the short term it will be on higher-volume lines but it will kick through. It tends to be a drip, drip over the piece."

In some areas of the supply chain "people don't just pick up and drop and be too opportunistic", said Green. But the weak euro is "a consideration with Christmas coming up" with high-volume lines likely to be under pressure from imports.

The new lower rates have yet to be in place for a full season and are yet to be too marked in the north of England, he said. But there is uncertainty in the market. "If it stays this low who knows what's going to happen?"

He said some buyers hedging rates has mitigated influence and stopped volatility, but there is still price pressure within the supply chain.

NFU acting chief horticulture adviser Dr Chris Hartfield said: "Growers have been saying for some time that the situation with the euro is concerning. There is significant downward price pressure on product and that coupled with supermarket price wars makes for a very challenging marketplace.

"Growers are struggling to compete and while there is a lot of loyalty to British growers' product there is always a fear or concern about how long that loyalty will last."

The Christmas crop market "depends on the deals you have done with your customers", he said. "We have some growers who have already done deals for 2016 and into 2017, and they would have made those deals in the light of knowledge of the current situation. But yes, we're moving into a season where ... there is plenty of European product in most categories, particularly with the ongoing Russian trade ban situation."

Hartfield said growers need to stick to their guns and carry on producing top-quality produce, new varieties and plants that are better adapted for the British garden. "We know the consumer is increasingly looking for British-grown product."

Coblands Nurseries sales manager Lewis Normand said: "Anxiety over the stability of the euro as a long-term currency must be a concern for those dependant on it. Events in Greece as well as the slump in a number of other European economies is a concern to buoyancy generally, but we should look to our strengths here in the UK.

"The strength of the pound may vary but it's a pretty reliable currency and our buying from Europe is now often conducted in sterling where we have a predictable price and we can reprice as sterling strengthens against the euro.

"I'd say that supply through the UK is excellent in terms of quality and comparable in price. As fuel prices have risen again of late, the cost of distance travelled as well as the environmental impact of this distance has once again become more of a consideration. We need to continue to play to our strengths using UK plant supply wherever possible. Price is important but stability in the UK horticultural industry more so and we all have a responsibility to buy British."

Last week B&Q said it would stock British poinsettia and many retailers have committed to UK Christmas trees. But Green said any extra stock is likely to come from overseas and will "drive prices down".

Garden Centre Fresh managing director Paul Moors said: "It always helps when products become cheaper, but the stability becomes an issue when we set ranges and the currency fluctuates so much. It's all very good for short-term business but we need long-term stability. Of course exchange rate changes are not new and we work closely with client and bank to give the best possible service and rate."

HTA horticulture head Raoul Curtis-Machin said there is "ongoing concern about the weak euro", which could lead to an increase in plant imports.

YouGarden managing director Peter McDermott said the exchange rate is likely to stay at EUR1.40 until spring 2016 and is attractive to importers. He has fixed euro rates until then.

Outstanding deals Four Oaks Trade Show

A favourable exchange rate for importing plants to the UK means that the Four Oaks Trade Show will be a great place to pick up outstanding deals from nurseries, say exhibitors.

About 450 exhibitors and more than 700 stands have been booked for the Cheshire show, with a record 38 per cent from overseas, said organiser Pat Coutts. Some 180 of the 450 companies at the show are from overseas - a record level.

- See HW 21 August for our full Four Oaks Trade Show preview.

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