Non-tariff barriers could be 'horrific' for exporters in the event of a hard Brexit
Brexit poses a major threat to Ireland agricultural manufacturing industry, the CEO of the Farm Tractor and Machinery Trade Association has warned.
Until recently, due to its proximity, most Irish agricultural manufacturers did not consider the UK or Northern Ireland to be export markets - but that may change significantly if the UK crashes out of the EU. Most Irish machinery manufacturers export when they reach a certain scale, but the main markets have always been Northern Ireland and Britain, according to FTMTA chief Gary Ryan.
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He says: "Most manufacturers would not consider either as an export market. Farming in Ireland is a 32-county business."
Ryan cites location, the similarity of farming practices and the lack of a language barrier as reasons why the UK market is so attractive.
"We are not great at speaking other languages, and farming in the UK is similar to here," he says.
For some manufacturers, exports account for 50pc of turnover, and some look far afield.
"There is a surprising amount of Irish machinery in New Zealand, and some companies have really started to develop other export markets," says Ryan.
"Manufacturers have been looking at non-EU markets for a while. New Zealand is the obvious market, but it is not so straightforward, with significant borrowing levels on farms there.
"But the UK is still the major market for Irish agricultural machinery exports."
Agricultural machinery manufacturing in the UK has diminished in recent years, and they do not make some of the equipment they need.
In 2016 the value of Irish exports to the UK from the sector was in the region of £70m, and while it's less than it used to be, it is still healthy, according to Ryan,
He says the UK machinery market remained very good after the Brexit vote - farmers there still had spending power.
"However, uncertainty is now affecting the market and market access will be a key issue for exporters," he says.
Ryan says trade last spring was "terrible", around the previous Brexit date in March, and reckons sentiment has been impacted "much more" ahead of this month's deadline.
"We were guilty of having our heads in the sand and thinking it would not happen, but the UK is only now starting to worry about it in the past three months," he says.
"Now, they have started to focus on it, but the machinery industry in the UK does not want it to happen. I would find it hard to get a UK colleague who voted for Brexit, but some of them must have.
"The last eight weeks have seen trade be very quiet. There is huge uncertainty."
If our primary export market is going to be more difficult to access, we need to look at developing other markets, Ryan says.
Agricultural machinery may be exempt from tariffs, but there will be other barriers.
"Lead times will probably get longer and it may be harder to do business with Irish suppliers," he says.
"But we have to assume they are going to continue farming and will have a need for farm machinery."
Small companies will be worst hit by non-tariff barriers, and it could be "horrific" for some. The customs administration could be too much for some manufacturers.
"Those not used to dealing with non-EU markets probably have no experience of what could be in store, and in many cases, customs agents will be needed," he says.
"I worry about the administrative burden for smaller businesses. If they have to fill out customs declarations, it will be very difficult for them. Customs agents are not as readily available as before, and many may only deal with people who ship through them.
"It will eat resources and you will have customers screaming about lead times."
Ryan also fears that the potential impact on the beef sector in Ireland would severely affect machinery manufacturers here.
"If we see an impact on beef supplies to the UK, the customer's buying power here will be much diminished," he says.
Ryan points out that last year Irish contractors and farmers bought 45 new combines, but sales are back this year. And in 2017, 5,000 new tractors were sold in Ireland, but that number has slipped to just 2,000 this year to date.
"And while increased horsepower means the volume of tractors being sold will decrease, the sentiment since August in the trade has been bad," he says.
Dairy expansion over recent years has seen the demand for grass equipment increase, but only up to mid-August this year.
"Milk prices are under a bit of pressure, but overall it's still not bad in dairying," says Ryan.
"However, the cost of production was so much less 10 years ago. Rent prices, along with investment in steel and concrete, have seen costs rise. Dairy farmers are doing okay, but you might be looking at your local creamery which is sending cheddar to the UK, and you wonder what will happen to that cheddar in a no-deal or hard Brexit."
However, Ryan remains confident Irish agriculture can survive.
"Irish agriculture has got through BSE and food-and-mouth disease, but the uncertainty around Brexit is affecting my members as much as it is affecting farmers," he says.
"Farmers are on their own in many cases and it weighs on them a little more than it does businesses."
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