Farm Ireland
Independent.ie

Wednesday 19 September 2018

The guessing game - With less than a year to Brexit, confusion and uncertainty reign

 

Ulster says no: a sign close to the border on the main road between Newry and Dundalk
Ulster says no: a sign close to the border on the main road between Newry and Dundalk
Louise Hogan

Louise Hogan

"Our national journey out of the EU is almost over - and a glorious view awaits." As the clock ticks towards Brexit that is the worldview of the UK's foreign secretary Boris Johnson.

Yet, the vista Boris sees differs dramatically from the economic analysis and the reality on the ground in the agri-food sector.

Uncertainty has been the only constant since the UK voted to exit the EU.

The impact of the 2016 referendum was immediate as farmers and agri-businesses felt the pinch. Sterling slumped, and the horticultural sector took a hammering as some mushroom producers went to the wall.

Two years on, uncertainty remains the defining feature of Brexit with no one knowing what the terms of departure will be, when a deal will be completed or how long the transition period from EU membership to the new 'global Britain' will take.

On this side of the water, the potential impacts of a hard Brexit on farming and agri-businesses have been well signalled.

Theresa May. Photo: PA
Theresa May. Photo: PA

Yet as the incoming UCD Professor of Agriculture and Food Economics Dr Michael Wallace points out, key policy makers in the UK still don't appear to accept the potentially destructive impacts of Brexit for the UK's agri-food sector.

In his current position with Newcastle University, Dr Wallace has studied the impact on UK agriculture and the future of direct payments for farmers post Brexit.

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The UK government has suggested that the CAP payments which currently account for about two-thirds of average farm incomes in Britain should be phased out in the longer term.

However, Dr Wallace says there has been no confirmation that the devolved administrations will be granted money from Westminster for agri support policies for their jurisdictions.

Glass half full? Agriculture Minister Michael Creed, Dr Michael Wallace and Aoife Byrne, UCD, at the UCD Brexit event. Photo: MacInnes Photography
Glass half full? Agriculture Minister Michael Creed, Dr Michael Wallace and Aoife Byrne, UCD, at the UCD Brexit event. Photo: MacInnes Photography

Regions such as Northern Ireland and Scotland could be hardest hit.

Dr Wallace said farming in these regions is less diversified than England and more reliant on beef and sheep markets.

British Foreign Secretary Boris Johnson. Photo: AP
British Foreign Secretary Boris Johnson. Photo: AP

Looking at the bigger picture, there are concerns that a 'cheap food policy' post-Brexit would lead to imports of cheaper chicken from the US and beef from the South American powerhouses.

Dr Wallace says that a Unilateral Free Trade (UFT) scenario would expose British farmers to direct competition from low-cost global exporters.

British farmgate prices would shrink towards world market levels and could decimate farm incomes.

This in turn would have drastic knock-on effects for Ireland given that 50pc of our beef exports are sold to Britain.

Speaking at a Brexit briefing in UCD, Dr Wallace added that the Food and Agriculture Policy Research Institute (FAPRI) trade model projections suggest that UK beef prices could decline by 40pc in this scenario.

Agriculture Michael Creed warned there are very few policy, business or financial decisions to be made over the coming months and years that will not be affected by Brexit.

Mr Creed said he held hopes that we were in reality only a third of the way towards the final British exit from the EU.

Transition

The European Council has agreed a draft of the Withdrawal Agreement, which contains a potential transition period of up to December 2020. This will now be negotiated.

"While the exact set of actions necessary to avoid a hard border on the island have not yet been finalised, both the EU and UK negotiating teams have committed to discussions over the coming weeks in order to progress this issue," he said.

However, he stressed it was British public opinion that may lead the way on food policy as consumers have indicated they will not buy cheaper products such as chlorinated chicken.

Ireland does not want to give up on its "hard-won" UK market, said Minister Creed.

Officials have met with the CEOs of the three major UK retailers - Tesco, Sainsburys and ASDA - to assure them that Irish produce is there for the long haul and standards will remain high.

Ireland continues to seek free access to the UK market, without tariffs and with minimal additional customs, he stressed.

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