This is a subscriber-only article
As we go to press, hope is building that the EU and the UK will agree a basic free trade agreement. The move earlier in the week by the British government to scrap controversial legislation that could have undermined parts of the Northern Ireland protocol within the Brexit Withdrawal Agreement has injected fresh momentum into negotiations. But whether it was an attempt by British Prime Minister Boris Johnson to strike a deal with the EU or merely gain support in the US, time will tell.
Albeit that serious challenges remain, many expect a positive outcome to crunch talks between Boris Johnson and European Commission President Ursula von der Leyen. A deal that prevents the EU/UK trading relationship defaulting to WTO rules in the coming weeks is a welcome development for both the Irish economy and farmers. Assuming it is ratified, the imposition of a €1.3bn per annum tariff bill on agri-food exports from Ireland is avoided.
However, few can credibly celebrate the outcome as a success. While east-west trade flows will have been protected the impact of Brexit on farm incomes remains. Immediately there will be the effect of non-tariff barriers (NTBs). Increased regulator checks and inspections are calculated to cost the equivalent of 10-12c/kg in the case of beef and 1.2c/l for dairying.
Despite words of comfort in relation to supporting British farmers, it is a chip that will quickly come into play
But this is only the start. The real cost will come in the erosion of value in the UK market. It will not happen overnight but the direction of travel will be clear and sustained. A basic free trade agreement leaves the British government free to open up its markets to third countries in a bid to achieve its global trade ambitions.
With imports averaging close to €100m per day allowing access to their agri-food market is one of the most valuable bargaining chips the British have in realising their global trade ambitions. Despite words of comfort in relation to supporting British farmers, it is a chip that will quickly come into play.
Already we see trade negotiations with both Australia and New Zealand at an advance stage. Both countries are focused on gaining access for beef and dairy products into the British market. It is not inconceivable that each will have a presence secured within months. Meanwhile the US, Brazil, Argentina and Uruguay will all want a slice of the cake as each seek to advance trade relations. The Canadian Cattleman’s Association is calling on its government to negotiate reciprocal beef market access when it negotiates a trade deal to replace the interim roll over of CETA with the UK.
Doing a deal requires the goodwill of both parties
In this scenario a declining share of a lower value market will effectively become the trade barrier that will see Irish food exports into Britain significantly curtailed in the years ahead. Those who put faith in British retailers and consumers to resist cheaper imports forget that this is the same supply chain that a few years ago had no issue with buying six burgers for £1.
The blame for failing to reach the type of comprehensive trade deal required to protect access to and future value of the British market cannot be laid solely at the doorstep of EU and Irish politicians. Doing a deal requires the goodwill of both parties. However, where politicians and policymakers can be held accountable is in how they respond to the outcome.
Rather than celebrating a basic free trade agreement, that will merely delay rather than prevent the economic impact of Brexit on farmers, attention needs to quickly focus on how impacted sectors can be supported.
A long-term strategy is needed that includes, but extends beyond, financial assistance
The €5bn EU Brexit crisis fund plus a financial commitment from national government will provide short-term pain relief in 2021. But it is not a long-term solution to a problem that will steadily become more acute. A long-term strategy is needed that includes, but extends beyond, financial assistance. This was emphasised this week by IFA president Tim Cullinan in his address to the Agricultural Committee of the European Parliament. Market reorientation will be required to underpin both demand and value within the EU market for product displaced from Britain. A key aspect of this will be a commitment to revise EU market access for non EU countries – particularly in the case of beef. The political resistance to achieving this should not be underestimated. Exceptional aid measures for a restructuring of various sectors, such as the Irish suckler herd, should also be sought.
Meanwhile farm organisations both in Britain and Ireland should be proactive. British farmers will be heavily impacted by the devaluation of their market due to cheap imports. While domestic product will attract premium it will be from a much lower base if the market becomes flooded with cheap imports from across the world.
British farmers would be much better served by ensuring that any import deficit was met by a country like Ireland with a similar cost production model and equivalent standards. Is it a stretch too far for farm organisations to unite in the development of a British and Irish offering that would help safeguard against cheap imports?
On Tuesday, Teagasc published its 2027 sectoral roadmaps. The following day, the Department of Agriculture published its roadmap towards climate neutrality. There are many positives within both – showcasing the potential to drive profitability across sectors plus the promotion of many technologies that improve both economic and environmental sustainability.
But worryingly for farmers, we see evidence of a clear policy direction being formed in some areas on the back of research that is not being demonstrated widely at farm level. The result will be a reduction in farm profitability and potentially a swing away from grass-based production unless much-talked-about strategies to replace artificial nitrogen become mainstream practice.
While breeding objectives may be well rehearsed, there are clear gaps in relation to the critical areas of grassland management, particularly associated with the impact of limiting the use of chemical nitrogen on farm profitability.
When published in 2015, a target of 250kg of N was a central plank in the Teagasc 2025 roadmaps.
As Aidan Brennan reports, this has now been reduced by 32%, with 150kg hailed as current research performance, and 170kg proposed as the industry target for 2027.
The Ag Climatise document focuses on reducing total N usage by 20% by 2030 but makes no mention of the 10% reduction expected in farm profit as a result of that. This was made crystal clear in the recently published nitrogen report.
There are of course many measures farmers can do to improve nitrogen use efficiency on farm, the most obvious being a national liming programme as recognised in the Department’s strategy.
Clover
For Teagasc the big bet is being placed on the incorporation of clover into grassland swards. Few could argue with the logic but the variation in success at farm level of maintaining high-clover swards must be recognised. Addressing this will require a major programme educating farmers both in terms of incorporation and management of high grass clover swards.
If delivered, it will be a win-win for both farm profit and the environment, but the scale of the challenge should not be underestimated.
Nor should the need to support these new breeding and grassland management initiatives through TAMS.
In spite of all the challenges that exist within the beef sector, it’s been a remarkably positive autumn for breeding, fatstock and pedigree sales.
Progeny from some of these animals won’t be sold until 2022 at the earliest. It shows the commitment and resilience that exists within the suckler sector to try and purchase the best and breed better stock. The good trade is also a testament to both pedigree and commercial breeders who through their breeding decisions are now attracting customers from all across the UK.
Importance
With a lot of the high-priced animals this autumn being exported to Northern Ireland and beyond, it demonstrates the importance of maintaining this export trade in 2021.
Over 30% of the bulls sold at the Christmas pedigree Charolais sale in Elphin last weekend were exported, demonstrating how critical these customers are to Irish breeders.
SHARING OPTIONS: