With the factory protests over, attention turns to the budget and Brexit

With factory protests having ceased, cattle throughput is slowly returning to normal. But the end of the protests does not signify an end to the income crisis. At a base price of €3.50/kg, farmers are incurring heavy losses. There is no scope to relax. The commitments secured by Minister for Agriculture Michael Creed to deliver increased transparency in the sector must be delivered within agreed timelines. Adam Woods goes into detail here.

At the same time, attention must now turn to Budget 2020 and Brexit. To put it into context, the 30-month rule that received so much attention in recent months was calculated to be costing farmers just over €10m per annum. A no-deal Brexit, where World Trade Organisation (WTO) tariffs are imposed on Irish exports into the UK, would see our agri-food sector hit with a trade tax of €1.2bn per annum. The beef sector is by far the most exposed, facing trade taxes of €1bn per annum. Not only exposed to any collapse in beef price, the Irish dairy sector could see trade taxes on dairy products reach €100m per annum.

While WTO tariffs are the worst-case scenario, few have been willing to guarantee that in just 36 days’ time on 31 October Ireland will not find itself in this position.

The decision by the supreme court in the UK on Tuesday that suspending parliament was unlawful only adds to the uncertainty.

The UK proposal that a 230,000t zero tariff beef import quota would be put in place in the absence of a Brexit deal provides little comfort. While such a move would eliminate trade taxes on Irish beef into the UK, it would dramatically devalue the UK beef market. This zero tariff quota would be open to all WTO members including Brazil and Argentina, where beef price is the equivalent of €2.16 and €2.25/kg, with global competitiveness boosted greatly by currency devaluation over the past five years.

The proposal to introduce an all-Ireland agricultural zone would do little to protect the income of farmers on either side of the border. Both are dependent on the value of the British market being maintained.

The budget will be watched closely to see if the Government plans to honour its numerous commitments

Against this, it is right for Government to frame Budget 2020 in the context of a no-deal Brexit scenario. However, it will be watched closely by farmers and rural communities to see if the Government plans to honour its numerous commitments made to protect agriculture from the effects of a no-deal Brexit.

We remind An Tánaiste Simon Coveney of a commitment given to the Irish Farmers Journal in September 2018: “I can promise you we certainly won’t abandon farmers if Brexit takes a turn for the worse.”

It would not be credible for the Government to frame Budget 2020 around a no-deal Brexit and for it not to contain an extensive range of measures to protect farm incomes.

Lessons should be learned from the BEAM scheme. The temptation to re-announce funding already provided for BEAM on budget day should be avoided. While there has been much political commentary over the fact that the scheme has been under-subscribed, attention should focus on the design of the scheme and the measures within, relative to the payment received. The IFA has described the fact that €20m will go unspent as a major own goal by the minister.

Hopefully events of recent weeks will have shown the Government the need for Budget 2020 to provide for a properly constructed scheme that will provide long-term support for the beef sector. Another scheme providing ad-hoc policy measures with small top-up payments will be of little use.

As with the Government, European Commissioner for Agriculture Phil Hogan has reassured farmers on numerous occasions that the tools exist within the EU to intervene in the market should a no-deal Brexit become a reality. It is time that he or indeed his successor outline exactly how these tools will be deployed.

In the event where Ireland faces trade taxes, the EU will need to implement a tariff equalisation scheme that offsets their impact on the market. Minister Creed and Government colleagues have frequently emphasised the need to keep the presence of Irish beef on British supermarket shelves and market intervention measures that divert product into storage should be a last resort.

Of course for farmers, the most logical but perhaps politically challenging solution would be to create a common EU-UK arrangement on agriculture if striking a wider deal is not possible.

Irish milk prices seem to be lagging well behind international prices. Our most recent information on August milk prices from Denmark and the Netherlands shows prices between 31 and 32.7c/litre compared to the Irish price of 27c/l like-for-like for most of our August supply (see this month’s Milk League).

At the extreme, that’s almost a 6c/l difference between Ireland and the Netherlands, which is a gap way above where it should or needs to be.

Co-op board members will need strong information to justify these lower August Irish milk prices from fellow farmers.

Speaking to some of the delegates at the international dairy summit in Turkey this week, it seems there is still no consensus on how to bridge the needs of the developing world and those of the developed world in terms of protein requirements.

It is clear from the statistics presented that there is still a very real need and demand for more dairy protein in the developing world. Irish dairy has a real role to play and can fulfil this opportunity in the right way. Low prices sending signals to Irish farmers to produce less would not tally with the demands from the developing world.

As Andy Doyle reports, Glanbia has announced a base price of €128/t for green barley. The 33% drop on last year’s price coincides with 50-60% drop in the price of straw and will leave most growers struggling to return a positive margin. For members qualifying for the trading bonus, the price increases to €141/t. With trading bonuses playing such a significant part in the price Glanbia pays for milk and grain, it is imperative that the board ensures the business remains competitive on key input prices. It would seem prudent from a board perspective that an independent audit of input prices across the industry would be carried out regularly to ensure the prices being charged to those in trading schemes are in line with the market. A bonus payment for milk and grain that is underpinned by inflated input prices does nothing for farm incomes.

The importance of live exports in underpinning the trade has never been more evident than at present. As Paul Mooney reports, over 5,000 weanlings will set sail for Turkey and Slovakia in the coming days. The added demand is undoubtedly putting a floor in the trade at a time when there is so much uncertainty in the domestic market.

The hard work that goes into developing and supplying these markets should be acknowledged.

With weanling sales set to ramp up in the coming weeks, it is important farmers have a solid understanding of the value of their stock. Not only will we continue to deliver the most accurate price data through our MartWatch pages, but we also now provide live price data on animals sold through many of the country’s leading livestock marts through our MartBids app and daily reports on farmersjournal.ie

Also this week, we reveal the Department’s thinking on CAP. What jumps out is the loss of the greening payment and a 30% cut of existing entitlements. This effectively means original higher entitlements are more than halved and places all full-time farming outside dairying in grave danger.