Brexit storm clouds gather over Ploughing Championships

UK departure from EU vast challenge to Irish farming as exports facing collapse in demand

IFA president Joe Healy: “We export 90 per cent of our beef, 50 per cent of that goes to the UK market, 45 per cent goes on to the European market, but half of that uses the UK as a land bridge to go to the European market.” Photograph:  Finbarr O’Rourke

IFA president Joe Healy: “We export 90 per cent of our beef, 50 per cent of that goes to the UK market, 45 per cent goes on to the European market, but half of that uses the UK as a land bridge to go to the European market.” Photograph: Finbarr O’Rourke

 

Bad weather is always a worry at the National Ploughing Championships but this year a particularly large storm cloud is hanging over the event – in the form of Brexit.

About 250,000 people are expected to attend the annual National Ploughing Championships in Tullamore, Co Offaly, over the next three days and the uncertainty of outcome of Brexit negotiations, and recent sterling fluctuations, will be at the forefront of the minds of many attendees.

“Brexit is the biggest challenge, not only at the moment. It is probably the biggest challenge in any of our lifetimes,” said Joe Healy, president of the IFA. The uncertainty around Brexit is causing jitters for anyone involved in the agriculture sector, but one thing seems certain, if the UK leaves the EU on the schedule date in March 2019, the trading relationship with Ireland’s largest export market will change. Because of Ireland’s dependence on the UK market, that change is likely to be negative.

“Over €4 billion worth of our exports goes to the UK, 90 per cent of mushrooms go to the UK,” said Mr Healy. “We export 90 per cent of our beef, 50 per cent of that goes to the UK market, 45 per cent goes on to the European market, but half of that uses the UK as a land bridge to go to the European market.”

Already, there has been fallout from Brexit for Irish agriculture since the referendum vote last year. “We saw quite a number of mushroom growers go to the wall and go out of business and we saw €150 million lost to the beef sector,” said Mr Healy. The steady decline in the value of sterling has hit Irish beef farmers given the scale of the exports to the UK. “We saw in the last month or six weeks, Irish farmers losing €2 million per week selling their beef animals,” said Mr Healy.

Divorce terms

The uncertainty of the final Brexit deal and what the trade arrangements will be means it is difficult for anyone in the sector to make long-term plans. “No one really knows what Brexit will mean, we don’t know the terms of the future relationship, we don’t know the terms of the divorce,” said Dr Kevin Hanrahan, head of the rural economy and development programme at Teagasc.

One thing that seems certain is that any change to the single market conditions that currently exist will bring at least disruption in the form of delays and added costs to doing business. At worst it would end the trading relationship with the UK because of steep tariffs.

In the event that the UK fails to agree a post-Brexit deal with the EU, World Trade Organisation (WTO) tariffs would apply immediately to trade with the former member state. The beef and cheese sectors would be among the worst-hit as these sectors have the highest tariffs.

A report by the Economic and Social Research Institute shows that, in such a “hard Brexit” scenario, there would be a reduction in trade of over 60 per cent for dairy and 85 per cent for meat products. “There would be a €2.1 billion wipeoff in our beef and dairy going into the UK,” said Mr Healy.

The cheddar cheese industry is an example of a sector that will be particularly hit whether there is a hard or soft Brexit. Two-thirds of cheddar cheese produced in Ireland is exported to the UK.

“The whole cheddar industry is totally built on the UK consumer market,” said Conor Mulvihill of the Irish Dairy Industries Association. Cheddar is not consumed by other EU countries. The industry is planning for the worst, said Mulvihill. “We can’t turn around and sell to France or Germany – they don’t eat cheddar there.”

Alternative markets

“It will be very hard to find alternative markets for that volume of products, that will be the biggest challenge,” said Mr Hanrahan.

There is another indirect hit to Irish farmers from Brexit, the potential loss of the UK’s contribution to the EU’s Common Agricultural Policy (CAP), which implements a system of subsidies and other agricultural programmes. The loss of the UK’s contribution could reduce the amount of money available by 10 per cent. Irish beef and sheep farmers are among the most dependent on CAP, said Mr Hanrahan. “They would see their incomes drop,” he added.

With the storms of Brexit gathering, actual storms at this time of year are also preoccupying farmers. A long, hard winter can have devastating impacts as seen with the fodder crisis in 2013. “Suckler farmers and dairy farmers are having to house livestock in August – that’s a long winter in front of them,” said Mr Healy.