What is Irish farming's beef with looming Brexit?

Tight margins and currency fluctuations make exporting food from Ireland to the United Kingdom a tough business at the best of times. Brexit makes it worse.

The outcome of this month’s UK general election, with its destruction of Prime Minister Theresa May’s ambition of a bigger House of Commons majority, has layered on even more uncertainty.

Everyone in the beef business knows that Brexit-created trade tariffs will be catastrophic: 60c off a kilo of beef, for a start. "It's not a runner," the agrifood economist Ciaran Fitzgerald says.

Irish farmers currently get €1.3 billion worth of European Union supports, 80 per cent of it going to beef farmers. Forty-one per cent of Irish food and drink exports, worth €4.4 billion a year, go to the UK. Seventy per cent of prepared consumer foods made in Ireland, 56 per cent of meat produced by Irish farmers and nearly a third of all dairy end up on British tables.

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The effect of World Trade Organisation tariffs on Irish trade, competitiveness, company profits and farm incomes would wipe out many businesses

If the United Kingdom fails to agree a post-Brexit deal with the European Union, World Trade Organisation tariffs could apply immediately on trade with the former member state. That would mean UK-bound Irish beef could face an average tariff of 74 per cent. The impact on Irish trade, competitiveness, company profits and farm incomes would wipe out many businesses.

Bred for UK retailers

The 150 cattle on Angus Woods's farm in Ballinabarney, Co Wicklow, are bred "to the specification of the UK retailers": the age they like, the type of carcass they prefer, all sold under the "Irish and green" brand.

"We've developed that over decades to meet the demands of British consumers," Woods, who chairs the national livestock committee of the Irish Farmers' Association, says. The British market makes sense.

From his farm he can see the Welsh mountains on a clear day. “We can do next-day delivery,” he says. And they are the best payers. Other markets are farther away and will not produce the same returns.

Everything in farming takes time. Already the Wicklow farmer is preparing for the business he will do in 2020. Calf numbers for 2018 are planned, the animals ready for sale 18 months later.

Uncertainty is unhelpful, and never more so than now, Woods says. “What farmers want is a bit of stability. They want to know what they are working with.”

The European Union must realise that this is an EU-wide problem, not just an Irish one, he says. “It needs a European solution with the co-operation of the UK.”

If Irish farmers cannot sell profitably into the UK they will have to sell elsewhere. Selling 260,000 tonnes of Irish beef into the rest of Europe will damage the EU market; the same applies with pork and poultry.

EU food-quality standards are in the interests of UK farmers and consumers, Woods says. One would be destroyed by the UK’s past cheap food policies; the others would suffer from lower food quality.

Innovation required

New beef markets can be found, says Prof Gerry Boyle, the director of the agriculture and food-development authority Teagasc, but innovation is required.

Many people do not understand the investment needed, however: shelf lives must be extended; more must be made of the fact that Irish cattle are fed on grass.

Every new market has its own rules: carcass-cleanliness rules differ; some countries prefer different types of animal; local tastes vary. There are cultural differences, too.

The United States market has not yet taken off, but it will do so, Boyle says. Likewise, China will become a significant market once administrative hurdles are cleared.

Ireland's biggest meat-industry players have a head start coping with Brexit, as many of them, including Larry Goodman's ABP Food Group and Dawn Meats, already have a strong presence in the UK.

Mergers and amalgamations have helped. Dawn, for example, recently partnered with the Tyrone-based Dunbia, which has two large plants in Northern Ireland and seven in Britain.

With fresh meat and live animals, border inspections are inevitable. That increases costs for Irish agriculture

For Dawn the venture offers a Brexit buffer. More consolidation could happen, but Woods fears the impact change could have on smaller players, including farmers.

Brussels, like Ireland, may be hoping the UK will join a tariff-free customs union after Brexit, but that still means there will be a Border, and border controls. With fresh meat and live animals, border inspections are inevitable. That increases costs for Irish agriculture.

Complex trading pattern

For Prof Boyle the future will be a complex trading pattern between Northern Ireland and the Republic, covering dairy, feedstuffs, mushrooms, poultry and pigs. Well-established animal regulations are in place, however, and he is happy there will be recognition of that, whatever the solution.

Likewise, Irish companies have good relations with UK retailers. “There is a loyalty to the Irish product. That will make it ‘sticky’ in the worst-case scenario,” he says, although he worries about the impact the Border could have on local trade.

If the UK cannot be better off because of Brexit, the Irish farmer and Irish food industry cannot be worse off

Ireland needs a Brexit-fighting fund, according to Ciaran Fitzgerald: every 1,000 jobs lost in the food industry cost the State €21 million in lost revenue each year. Ten thousand lost jobs mean a €200 million annual bill.

“If the UK cannot be better off because of Brexit, the Irish farmer and Irish food industry cannot be worse off,” he says. “If not out of sympathy it should be out of self-interest for the rest of Europe.”