Farm Ireland
Independent.ie

Saturday 23 February 2019

Meat factories warn of ‘catastrophic’ collapse of meat sector from no-deal Brexit

  • Factories warn of price collapse and plant closures 
  • Irish meat industry sends 320 refrigerated trucks of meat to Continental EU markets weekly
MII warned that it is inevitable that producer prices will fall as a direct result of the loss of UK market share. Photo: Gerry Mooney
MII warned that it is inevitable that producer prices will fall as a direct result of the loss of UK market share. Photo: Gerry Mooney
Ciaran Moran

Ciaran Moran

Irish meat processors have issued a warning of the 'catastrophic' impact a no-deal Brexit would have on the sector.

In a document, submitted to members of the Oireachtas Agriculture Committee and seen by FarmIreland, Meat Industry Ireland (MII) said A ‘hard Brexit’, with the potential imposition of very high tariffs on trade with the UK, together with additional transport costs, delays at borders, disruptions to logistics, as well as unforeseen threats arising from potential regulatory divergence, will present a massive challenge for the sector.

"A No-Deal (hard) Brexit outcome would be catastrophic for Irish agriculture and our food export business," the organisation warned.

MII warned that in a hard Brexit scenario where Ireland is, de facto, excluded from the UK market, the likelihood is that an immediate crisis will happen.

"The impact on EU markets will be immediate, with surplus product being exported onto already well-supplied markets resulting in a price collapse," it said.

MII warned that it is inevitable that producer prices will fall as a direct result of the loss of UK market share.

It said where the best returns are currently obtained, and, in the absence of viable substitute markets, there will be no refuge from declining returns in a distressed market. 

"In an oversupplied market of the scale envisaged, processing companies will quickly examine and respond to the new market circumstances while taking steps to bring operational capability into line with new market realities.

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"With a sudden and significant reduction in access to the UK market, plant closures or restricted operations should be anticipated," it said.

Furthermore, it warned that there is a real and present danger of the UK concluding trade arrangements with other international suppliers, which would result in Ireland’s strong position as a dominant player in the UK market being permanently damaged. 

The Oireachtas Agriculture Committee has recommended that physical customs infrastructure be developed to ensure there is no disruption to the current smooth flow of goods and that considering be given to supplementing CAP funding from the Exchequer for the proposed CAP 2020.

MII highlighted that recent meat industry research estimated that the trade costs imposed by tariff barriers, customs and veterinary checks and increased transport costs would reduce exports of meat on conservative estimates from the EU to the UK by close to 84pc for beef, 48pc for pigmeat and 76pc for sheepmeat. In turn, it is estimated that the reduction in trade will create a surplus of beef and pigmeat affecting market price, causing a loss in the value of EU beef production of €2.4 billion per annum in the short run and by over €2.3 billion for pigmeat.

MII said a hard Brexit scenario will necessitate the introduction of an array of EU crisis measures, which would be needed quickly and of necessity remain in place until the EU market disturbance has been stabilised over the medium term. 

Such measures should it said include, supports that remain as options in EU legislation but have seldom been used since the 2003 CAP reform. 

"In the potential crisis that is likely to result from a ‘hard’ Brexit, such measures could put a floor on prices until wider stabilising measures can be agreed, acting to mitigate the worst immediate effects and act as a bridge until some semblance of order returns to the commercial market," it said.

In the context of a hard Brexit, a further serious issue arises for the pig sector. 

The current annual export of approximately 500,000 live pigs from the Republic to NI for processing will immediately stop if WTO tariffs

are imposed. Such a sudden shift in supply would give rise to a major processing capacity issue which in turn could quickly turn into an on-farm welfare concern on some Irish pig units, MII warned.

Meanwhile, MII said a survey of members found that each week, the Irish meat industry sends in the region of 320 refrigerated trucks of meat to Continental EU markets from Sweden in the north to Italy in the south. "Approximately 11pc of these trucks are shipped directly from Ireland to an

EU port. "The clear majority, 89pc, of consignments use the UK transit Land-bridge. 

"The risk of losing the Land-bridge as the main means of transit would carry enormous risks, distinct and separate from the fact that alternative routes would take time to be properly developed and involve significant infrastructural adjustments. 

"It would result in increased costs, longer journey times to market, reduce shelf-life, increased stock carrying requirements and serious disruption to a just-in-time fresh food delivery system that has evolved over the years and which is crucial to holding onto customers," it said.

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