Weak sterling: Winners and losers on both sides of Irish border

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There are few Irish businesses more exposed to the fall in value of sterling than mushroom producers.

Leslie Codd's family farm in Tullow, County Carlow, in the south-east of the Republic of Ireland, employs more than 200 people.

From six o'clock each morning, about 145 harvesters begin their day's work.

The mushrooms are picked, packaged, bar-coded and taken away by hauliers to UK and Irish supermarkets, all within a 24-hour period.

'Perfect storm'

Because mushrooms are so perishable, the producers can only realistically supply nearby markets.

That has now become a big problem for the Irish mushroom industry because of the fall in value of sterling after the Brexit vote.

Speaking on behalf the industry as a whole, Mr Codd uses phrases like "a perfect storm" and "falling off a cliff".

The sector employs about 3,500 people and is worth about 130m euros (£117m) annually.

About 85% of its produce is sold to the UK.

Short shelf-life

Five businesses have closed since the Brexit vote and others in the industry are worried, especially as the sector is not one where currency hedging is a realistic option because the product has such a short shelf-life.

Mr Codd says the mushroom business operates on "low, single-digit margins" and that, because of currency movements, "when you see your price affected by 25%, sometimes you just don't survive".

He predicts that unless UK multiples increase their prices, which they are reluctant to do, there could be mushroom shortages on the shelves of British supermarkets until such a time as the British suppliers fill the gap, a process that may take two years.

Sterling was trading at around 70 pence to the euro before the vote.

Now, it is about 90 pence to the euro.

'Sterling silver lining'

That is good news for the Buttercrane shopping centre in Newry, Northern Ireland, just a few miles north of the Irish border.

Nestled off what was once the main road between Belfast and Dublin, the centre is used to the changing patterns of cross-border shopping arising from currency fluctuations.

Because so many goods are now bought with plastic cards, the shopping centre's manager, Peter Murray, estimates where customers are from by their car registration plates.

Before the vote, he reckoned about 10% of customers were from the south but that has now increased to 25% and rising.

"Brexit has closed off northern shoppers heading south, which they were doing, and has encouraged southerners to come north," Mr Murray says.

"But, really for us along the border dealing with currency fluctuations has always been a case of swings and roundabouts, and we have now the silver lining of the Brexit dark cloud."

He expects a lot more customers between now and Christmas buying such items as nappies and baby wipes, alcohol, tins of biscuits, electrical goods and perfume but says it has not yet gone back to the days when coach loads of shoppers were arriving from as far south as Cork or Wexford.

'Brexit-proof budget'

One man who will keep a keen eye on the falling value of sterling, its implications for cross-border shopping and his VAT returns is the Irish Finance minister, Michael Noonan.

In his budget last week, he spoke of the expected impact the UK vote will have on the state's economy.

Several ministers talked of "Brexit-proofing" measures, but critics say that was more often a useful sound-bite than a case of new and useful measures for industries like mushroom production.

Mr Codd says the minister should have postponed asking employers in his sector to make social insurance contributions for a year.

Patricia Callan from the Small Firms Association was also disappointed with the lack of specific measures in Mr Noonan's budget.

She says that when the value of the euro rose to 85 pence it was "problematic" for most of her members, but at 90 pence their situation is "detrimental".

Most Irish small companies "have just come out of 8 years of recession", she says, adding "there is no fat to cut as businesses are already lean".

In the past, the Irish government did provide funds to troubled sectors but some now privately wonder whether the state is waiting to see if the fall in value of sterling is short-term or whether it signals a fundamental re-structuring of the economy before deciding whether to act.

'New opportunities'

While small and largely domestic industries in the Republic of Ireland are worried about the fall-out from the Brexit result, the multinationals associated with the huge Foreign Direct Investment sector have few worries.

Indeed, government ministers are also keen to point out that the UK leaving the EU also provides opportunities for the Republic of Ireland, most notably in financial services.

With its low 12.5% corporation tax rate, the Republic of Ireland will soon be the only English-speaking EU member within the single market - if there is a hard Brexit.

And it is that word "if" that highlights the problems facing governments, policy makers and small firms, including mushroom suppliers, at the moment.

Apart from perhaps, an inner group of senior people in the UK, nobody quite knows what "Brexit means Brexit" really means.

It is unlikely any extra light will be shed on it at this week's European Council meeting in Brussels.