Farm Ireland
Independent.ie

Saturday 21 April 2018

Brexit a double-edged sword for Northern Irish agri-food sector

The jury is out on the impact Brexit will have on the North's £4.7billion agri-food and livestock feed sector

Over 50pc of Northern Ireland's food and livestock feed exports are sold into the Republic, EU and other global markets
Over 50pc of Northern Ireland's food and livestock feed exports are sold into the Republic, EU and other global markets

Chris McCullough

Northern Ireland farmers could end up paying less for their livestock feed post Brexit depending on which trading deals are sorted out between nations.

Northern Ireland will be the only part of the UK that physically borders the European Union which will present trading challenges between the two Irish countries.

However, Brexit brings a chance for the feed companies to import grains from countries outside the EU that will maintain tariff-free trading agreements with the UK.

But, for the livestock feed companies based in the north, Brexit will make exporting feed to neighbouring Republic of Ireland costly, depending on the trading arrangements that are developed.

Thompsons Feeds is known as the largest multi-species feed mill in all of Europe and it just happens to be based in Belfast, Northern Ireland.

Company chief executive officer Declan Billington said Brexit could give the industry access to GM crops in the UK.

Mr Billington said: "If I was to sum up Brexit in one word it would be, uncertainty. Uncertainty in every aspect of our business.

"With 30pc of Northern Ireland production exported outside the UK and with EU tariffs on milk and beef products operating in the 50pc range on exports to Europe, exports become impossible without a trade agreement.

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"Northern Ireland is the only region of the UK which will have a land border with Europe. Post-Brexit, the default position is that the border will once again have a significant presence in our daily lives, with customs inspection and duty payments to be dealt with.

"The question is, where the border, affecting 3pc of the UK population, ranks in importance within the UK government?"

With many EU trade agreements currently in place, Northern Ireland agri businesses could be hit hard in terms of exports once Brexit kicks in.

Mr Billington said: "Europe has 53 trade agreements with other regions around the world through which we also trade.

"For some of our local companies, losing access to these agreements poses a direct threat to their export businesses including milk powder to West Africa and catering products to our world's catering companies.

"For others, it poses a threat to the price processors can afford to pay for the animal with the potential loss of sale of fifth quarter offal products into areas such as Asia.

"On a positive note, the ability to access grains tariff free, especially maize from North America, might make our input costs cheaper as will the ability to access UK-approved GM crop varieties yet to be approved by Europe.

Tariffs

"However, given the €95 per tonne tariff on feed wheat and a price floor of €154 per tonne on maize, our ability to trade feed and flour across the border into the Republic of Ireland will restrict the extent to which we can benefit from these opportunities in Northern Ireland.

"And to this uncertainty around future trade, we need to add currency volatility. Although the decline of sterling increases the cost of farm inputs, it also makes our producers' exports appear much cheaper on the world markets, assuming we do not face higher access tariffs.

"However, within the UK, feed and, thus food, will appear more expensive. The challenge is to get cost recovery on that 70pc of Northern Ireland food business traded into the UK market.

"In the short term, currency can be hedged but ultimately the hedge will unravel and within the highly competitive supermarkets will full cost recovery be achieved?"

The Northern Ireland Food and Drink Association recently published a report on how Brexit might be made to work for the North's agrifood sector.

"However, the right policies and negotiating positions need to be deployed and the question is, will the UK government listen to Northern Ireland industry?" asked Mr Billington.

"The answer is, as with everything Brexit related, uncertain."

Indo Farming