Thursday 17 October 2019

Agricultural industry may require EU help in worst case Brexit scenario

Opinion: Minister for Agriculture, Food and the Marine Michael Creed discusses the uncertainty surrounding beef farming

Minister Michael Creed
Minister Michael Creed

It has been a difficult new year for beef farmers. Poor market conditions have been compounded by continued Brexit uncertainty.

If the injury of continued income loss wasn't bad enough, the insult of a perceived increase in hostility towards the sector - in the guise of 'Veganuary', the 'Lancet' report and an avalanche of negative comment regarding the climate change credentials of the industry - has led to anger and unrest among farmers.

The prospect of a disorderly Brexit poses the most immediate and devastating threat to the Irish beef sector. My department estimates that additional tariffs for the Irish agri-food sector as a whole, on exports to the UK, would add €1.7bn in costs. This could reduce or potentially wipe out Irish exports of beef, dairy and pig meat to the UK market.

Beef exports to the UK in 2016 accounted for 50 per cent of total beef exports (valued at €1.1bn) - the estimated tariff rate equivalent (based on weighted averages) is 70per cent, approximately €781m. Teagasc modelling suggests a reduction of over 20 per cent in Irish beef prices, resulting in beef farm incomes reducing by up to 40 per cent. This would challenge the viability of many beef farms and have an impact on production, processing and employment.

The Department of Agriculture, Food and the Marine has been preparing for Brexit long before the June 2016 referendum or my appointment as minister the previous month.

But no amount of planning can prepare an industry for the potential loss of half its market, built up over decades.

We have had some considerable successes on targeting new markets. Being the first EU country to achieve access to the Chinese beef market is a significant one. But this will be a medium to long-term gain and will not compensate for the impact of a disorderly Brexit overnight.

If the worst comes to the worst, we will need EU help. Exceptional aid under the Common Market Organisation regulation will be required. EU Commissioner Phil Hogan understands this and we are in continued contact, as are our officials.

Nationally, we have been investing to try to build resilience in the sector. This week, I announced the opening of the €20m Beef Environmental Efficiency Pilot (Beep) announced in Budget 2019 as part of the €78m Brexit package for the agri-food industry. Beep is designed to provide an injection of investment at a critical time for farmers navigating the challenges ahead, while delivering in real terms on our climate objectives. Further to this, we have invested €300m in the Beef Data & Genomics Programme (BDGP) over the lifetime of the Rural Development Programme 2016-2020.

This year, farmers will see an increase of €23m in the Areas of Natural Constraints Scheme, aimed at the most marginal and challenged farm holdings, thus restoring the budget for this scheme to pre-downturn levels, following a further €25m increase last year.

Other supports available for beef farmers under Pillar II of the Common Agricultural Policy include the climate-friendly Green Low-carbon Agri-environment Scheme and the department's Knowledge Transfer Groups.

In total, according to the Teagasc National Farm Survey, suckler farmers receive support equivalent to approximately €500 per suckler cow on average.

Irish farmers are feeling unfairly targeted by much of the commentary surrounding climate change and climate action. Ireland is the fifth most carbon-efficient producer of beef per kg in the EU and the most efficient producer of dairy.

We have an economy that is heavily reliant on agriculture. While we have been very successful at decoupling emissions from output, I am very aware that in recent years we have seen an increase in our overall emissions.

To those who say that agriculture and beef farming in particular is part of our emissions problem; I say the sector is part of the solution in transitioning to an environmentally sustainable economy by 2050. The long-term vision for the agricultural sector is an approach to carbon-neutrality which does not compromise capacity for sustainable food production.

We are looking at taking a three-legged stool approach - firstly by reducing the intensity of agricultural emissions through schemes such as the BDGP and Beep, which will potentially reduce greenhouse gas output per cow by 10pc; secondly by increasing carbon sequestration through forestry and land use; and finally via the displacement of fossil fuels and energy-intensive materials with renewable energy and heat sources.

Irish beef farmers are a resilient, committed breed. They have faced challenges over the years, from BSE to the horse meat scandal, extreme weather to market volatility, and have overcome them all. Our beef sector is the foundation block of our €13bn-plus agri-food industry.

So while the commitment still remains on beef farms across Ireland to produce a safe, nutritious and sustainably produced product for the world, that commitment will be matched by Government action, as witnessed by this week's investment.