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There is a general consensus that agriculture will take a hit if the UK follows through on the recent referendum and leaves the EU. That will be damaging for Ireland and its rural economy and we can only speculate on where it will leave Food Wise 2025, the plan launched last year to chart the development of the industry for the next decade. The impact will vary across the sectors.
Dairy is exposed to the UK for 25% of sales, concentrated on cheddar. Dairy is a global market and Irish exports are spread across the entire world. Finding alternative markets would will be difficult and a challenge but not impossible. Also, the UK needs some butter and cheese imports, so we will still be as well placed as anyone, the anyone probably being NZ unless we (EU 27) have a punitive tariff and NZ had a sweatheart trade deal. Dairy has already been through a seriously difficult period but can survive. Logistics for cross-border businesses will present an unwanted challenge but should be manageable.
Sheepmeat
Sheepmeat also has possibilities. Lamb sales to Britain are around one third of our production, difficult to replace but not impossible. Also, lamb is a minority meat and with the UK being the biggest exporter in the EU at present, it does not have the same premium in the UK market that Red Tractor beef enjoys. Labelling has not yet led to branding and it is unlikely that it would have the same success.
With lamb being more standardised across the EU which is a net importer, we should be able to find other markets outside the UK if it all goes wrong post Brexit. NZ isn’t as UK-dependent for exporting its lamb as it was prior to the EEC. Also, if trade talks between the EU 27 and the UK go wrong, UK sales of lamb to EU will be disrupted so that in itself will be an opportunity. Our sales to Belgium, Sweden and Germany have been growing steadily in recent years and could do more if UK supplies were disrupted. A further point is that lamb is a simpler product than beef, with fewer component parts even in the added-value areas. Northern Ireland producers have had an initial boost to their trade selling lambs to southern buyers with the strengthening of the euro.
Difficult challenge
Grain is already a global commodity while, for pigmeat, the UK is a significant market but China is what lifted the siege this spring and is the future. Like with dairy, replacing the UK market would be a difficult challenge but, again, not impossible as it doesn’t set the benchmark global price.
How could Irish beef producers survive at these levels?
That leaves beef and it is impossible to find a silver lining if the worst case scenario emerges. No way is the EU going to give an inch on separate external trade deal negotiations whatever about migration. And if it comes to the bit we need to value beef at global prices which worst case is between €2.50 and €2.75 in Mercosur with Australia /US, almost a euro better.
Irish beef prices last traded in this price area between 2000 and 2005 and what we have to consider is how Irish beef producers could survive at these levels? If we think of €4/kg as the bottom line on beef prices, though many would say it needs €4.50/kg to be really viable, world market price is in a different place. There would be a serious deficit into which somebody needs to step if there is to be survival. Here, our lobby organisations need to get the gravity of the situation impressed upon our national Government and in Brussels as well. A combination of direct support, restoration of export refunds and closed access to the rest of the EU would be three essential measures to defend the beef market. These aren’t desirable political options in an era of free trade but the choice is to either support beef producers in return for them working to the ultra demanding EU production accords or sacrificing them and the rural community and replacing the product with an import offering.
SHARING OPTIONS: