Brexit could have ‘frightening’ impact on Irish agri-food sector

The implications of Brexit for farmers and for the food and agriculture sectors are "frightening" and could affect Irish competitiveness to a potentially catastrophic degree, a Seanad committee has heard.

Farming and agri-food organisations, as well as representatives of the horseracing industry, addressed the Select Committee on the Withdrawal of the United Kingdom from the European Union on Thursday.

Irish Farmers' Association president Joe Healy said analysis of the potential implications of Brexit for the farming and food sectors was "stark", and for the beef sector it was "frightening".

The UK was the market for 50 per cent, or 270,000 tonnes, of Irish beef exports.

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A loss of access would destabilise the overall dairy sector here, as a third of all our exports went to the UK and it was our main market for cheddar.

Mr Healy said the ESRI had estimated World Trade Organisation (WTO) tariff rates would "virtually wipe out" agri-food trade to the UK, with losses of over €2 billion for our meat and dairy exports.

He also said a strong Common Agricultural Policy (CAP) budget post-2020 was critical for farm incomes, farm output and wider economic activity.

Badly hit

Farmers had also been badly hit by the devaluation of sterling in the past year, with a loss of €150 million to the beef industry alone in the last six months of 2016.

The IFA, Macra na Feirme and the industry body Food Drink Ireland all told the committee the optimum outcome from a trading point of view in the Brexit negotiations was that the UK remained within the Customs Union.

President of Macra na Feirme James Healy told the committee the uncertainty brought about by the UK's exit threatened the business of every young farmer in the country, as most had not had time to establish the appropriate levels of capital and financial reserves to protect themselves.

Prof Gerry Boyle, director of the agriculture and food development authority Teagasc, warned that very high tariffs could apply post-Brexit to important elements of Ireland's agri-food exports to the UK.

‘Prohibitive’ tariffs

Such tariffs were “prohibitive” and, on the basis of responsiveness of trade to prices, could “destroy” this trade flow between Ireland and the UK. The competitiveness of Irish products in the UK would be affected to a “catastrophic degree”, he said.

He noted the most valuable trade flow from Ireland to the UK when measured at 2015 levels was fresh, boneless beef. UK imports were worth almost €540 million and World Trade Organisation tariffs calculated at 2015 rates would amount to 64 per cent.

UK imports of cheddar from Ireland in 2015 were valued at over €300 million and would, in the same scenario, face a tariff of 55 per cent.

Director of Food Drink Ireland (FDI), Paul Kelly, said the agri-food sector exported €4.1 billion of food and drink to the UK and accounted for 43,000 jobs.

Market diversification

The industry group suggested a number of short and medium-term measures to support the sector, including the delivery of €25 million in funding for market diversification and product innovation, administered by Bord Bia and Enterprise Ireland.

Britain’s exit from the EU also threatened the €1.3 billion contribution the horseracing and connected industries make to the Irish economy, the committee heard.

The Irish Thoroughbred Breeders’ Association said there were 6,777 registered breeders in the 32 counties, accounting for 14,617 mares and 8,563 foals. The industry employs 17,000 individuals and thousands more directly.

Chief executive of the ITBA, Shane O’Dwyer, said if the UK introduced any form of tax for UK buyers seeking to purchase animals outside Britain it would threaten about €80 million in sales for Ireland’s two major sales companies, Goffs and Tattersalls.