Isabelle Albouy at the French wheat producer's association AGPB said that while farmers begrudged an expected fall inintervention prices under the euro, they were cheering the end of the extreme distortions that devaluations and revaluations have caused. Slides in exchange rates have led to exporters being showered with profit while EU farm payments were calculated at the same green rate. Artificial, fixed Ecu-conversion rates ensure payments from Brussels stay on a par across the EU, but countries with weaker currencies benefit more from them. EMU will create a level playing field, replacing green rates with fixed euro conversion rates for the 11 states joining. But the lower rates will cut the amount the EU pays for surplus grain, wiping up to two per cent off the intervention price in the case of France, experts say.
Experts say the benefits of burying monetarydivisions outweigh any gripes.
Green money falsifies everything and scrapping it will give farmers better comparisons. And we still don't know if Britain and Denmark will trade grain in euros or not which makes things tricky. Traders face change of scenery Grain trades within the EU will no longer require currency hedges to protect against exchange rate risk, simplifying transactions but also wiping out a source of extra profit. Traders bemoan losing arbitrage opportunities under EMU but say the gains merit that. Hedging will still be needed for deals outside Europe, where the dollar is expected to remain the de facto grain currency.