€1 bn Brexit Adjustment Reserve: beef farmers need a plan

The clock is now ticking on Ireland’s €1bn Brexit Adjustment Reserve (BAR) allocation from the EU. Almost €500m is available this year as a first tranche of funding, of which almost €54m has been earmarked for 2021.

The Department of Agriculture, Food and Marine, the largest recipient, got €32m for the seafood sector and €1m for horticulture.

The remaining €500m will be available in 2023. There is likely to be strong demand for BAR funding across affected public and private sectors.

Under the Capital Investment Scheme for the processing and marketing of agricultural products, which is separate to BAR, the beef and dairy processing sectors have already availed of €70m.

This is part of a wider €100m scheme which aims to support product and market diversification and deliver greater resilience in the long term.

The impact is still in the future

The agri-food sector, beef in particular, stands to lose the most economically from the UK’s decision to leave the EU. To date, the UK’s trade deals have largely delivered some lowering of tariffs, mostly affecting agri food with few gains on services. The trade that flows on the back of these agreements will likely displace Irish product over time. The problem is somewhere in the future, not in the here and now. This is in contrast to the Irish fishing sector where the impact is being felt now – €20m was eliminated from mackerel and prawn quotas in 2021, increasing to €45m by 2026.

The question for the industry is how to address the impact of a challenge that has not yet materialised. The window for BAR funding is now and the options remain what they were almost six years ago.

1 Find new markets that will deliver similar returns

Finding new markets that deliver the same return as the UK is impossible in the case of cheddar cheese and hugely challenging for up to 40% of Irish beef.

Where new markets are found, they won’t easily replace the stability and trust that has been built up over hundreds of years of trading.

2 Improve production efficiencies

On paper, there are clear opportunities to improve efficiencies at farm level through grassland management, breeding and feed efficiency.

However, in reality if this were easy to achieve the sector would already be more efficient. There is scope for a renewed focus, particularly in the beef sector.

3 Reduce the output and/or diversify production

Diversifying production is very of this moment given the food security challenges that are rearing their heads.

However, it’s not a simple option and likely to take decades to achieve in any meaningful way.

The objective of the BAR fund is to make affected businesses and communities more resilient in the long term.

Reducing the scale of production is one option which, while unpopular, merits examination.

Suckler cow numbers have decreased by 20% in the past decade and continue to decline. The analysis in the Climate Change Advisory Council report relies on negative subsidies effectively squeezing suckler farmers out of production.

While everyone is at pains to confirm that cuts to livestock numbers are ruled out, the sector seems to be quietly relying on suckler farmers to do the unspeakable job to support emissions reductions.

Beef farming needs a strong business plan for the future. There is a strong business case for some type of resilience and sustainability scheme for suckler producers.

A scheme that supports economic viability while meeting the unstated objective of reducing cow numbers may serve farmers better than the continual erosion of the sector. It may also support improved efficiencies.

The industry should evaluate all options that deliver a resilient, market-orientated sector and a reasonable living. This may include examining the introduction of a suckler quota, which is a tradable asset, early retirement options and sustainability payments for reducing livestock numbers. In the context of emissions reductions, declining suckler numbers yield a huge dividend. Just transition would deem that this dividend should be compensated.

BAR offers a unique opportunity for the beef sector to address the challenges it faces. However, time is ticking and there are many competing priorities for this funding. Doing nothing is an option.

However, in three to five years’ time, when the funding is spent, how resilient will suckler farming be? A structured scheme could provide options for suckler farmers and a dignified restructuring of the sector.

Nothing less would be appropriate for the lowest income earners in the sector that form the bedrock of so many communities in Ireland.