Ireland scrambles to shield agriculture from Brexit threat

Gabriel D'Arcy, CEO of the LacPatrick dairy cooperative, said Ireland's agricultural industry will be the "eye of the storm" in Brexit negotiations.

Gabriel D'Arcy, CEO of the LacPatrick dairy cooperative, said Ireland's agricultural industry will be the "eye of the storm" in Brexit negotiations. [Irish Dept of Foreign Affairs]

The Irish government is scrambling to protect its agriculture industry, which exports almost half its goods to the UK, from the threat of Brexit.

Michael Creed, Ireland’s agriculture minister, has been rushing to shore up support measures that could shield the country’s €10.8 billion per year in agricultural exports from a potential nose-dive after the UK leaves the EU.

The agriculture industry is the “most exposed” Irish sector to the risks of Brexit, he argues.

Ireland’s agriculture industry is dwarfed by its technology and healthcare sectors on export value and employment figures, but 43% of its exports go to the UK.

Taoiseach Enda Kenny warned last week that the “most severe impact” of the UK’s divorce from the EU will be felt in Ireland. The Irish government is lobbying negotiators on an EU-UK agreement to protect Ireland from security threats and a possible trade fallout.

Creed is using his somber prediction of Brexit’s effects to ring alarm bells over the country’s agriculture industry, which he says is already buckling under pressure.

“For some people, Brexit is something that’s going to happen. For our agrifood sector, Brexit has already happened in many respects,” Creed told reporters in Dublin last week.

The fluctuating British pound and the looming threat of a Brexit choke on Irish imports have already pinched the industry, he said.

Irish food producers already lost €570 million in exports to the UK last year, marking an 8% drop from 2015.

The UK’s future trade relationship with the EU after it leaves the bloc is still unknown, and will take up to several years to negotiate.

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Tariffs

But Creed cited drastic World Trade Organisation tariffs that could apply if the UK leaves the EU customs union. He said tariffs of up to 50% could be slapped on to dairy products and 40% on beef imports to the UK and would be “calamitous” for Ireland. UK Prime Minister Theresa May suggested last month that she is prepared to leave the customs union after Brexit.

“Our ask will unapologetically be in the context of the negotiations for a continuation of the status quo, a tariff-free market,” he said.

Tariffs could see Ireland lose a chunk of its agricultural exports and suffer a blow to the 109,700 jobs in its agriculture sector, according to Creed.

He is pushing for the European Commission to kick in funds to guarantee farmers won’t be hard hit and already asked for subsidies to offset potentially plummeting export levels. This could mirror the payments given to Baltic farmers who were hurt by Russia’s ban on EU food products in 2014, Creed said.

A Commission spokesperson said EU Agriculture Commissioner Phil Hogan, who is Irish, has “not made any commitment in relation to the issue of EU financial support” to Ireland.

“Until the UK transmits its official negotiating position on the terms of withdrawal and the future relationship, it is premature to draw any conclusion on the possible implications of the UK’s departure from the EU on Irish agriculture,” the spokesperson said.

Creed is also urging Andrea Leadsom, his UK counterpart, to maintain EU food standards even after Brexit so the market isn’t flooded by imports from new trading partners with lower standards, potentially crowding out Irish dairy and meat.

If Brexit does bring trade tariffs on EU exports to the UK, Irish meat exports could take a major hit—more than half of the country’s exports of poultry, pork and beef are sent to the UK. Thirty percent of Irish dairy exports go to Britain.

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Eye of the storm

Gabriel D’Arcy, CEO of the LacPatrick dairy cooperative, told reporters during a visit to the firm’s headquarters that food and agriculture are “at the eye of the storm of Britain’s exit from the EU”.

Located around eight kilometres south of the border in County Monaghan, LacPatrick has factories in both Northern Ireland and the Republic, meaning the farm faces tricky questions on trade, employment and how it will process dairy if customs checks go up and tariffs are imposed on them.

The farm’s infant milk formula is processed at a factory in the Republic, but made mostly from milk drawn from cows in the North and then exported in bulk largely to West African countries under the EU-Ecowas trade agreement.

Just over 10% of LacPatrick’s business comes from sales to the UK, where its dairy products are sold at supermarket chains including Sainsbury’s, Marks & Spencer’s, Aldi and Lidl.

UK businesses are already hesitating to buy from the Irish company and have suggested they would rather find British producers they can hold on to tariff-free after Brexit, according to D’Arcy.

“Nobody knows what Brexit is, but everybody wants to know if we’re Brexit-proof,” he said.

Creed argues LacPatrick’s cross-border setup “makes the case for the Irish agrifood industry”.

Northern Irish farms stand to face worse effects from customs controls since 65% or the country’s agricultural exports go to the Republic of Ireland. Less than 5% of the Republic of Ireland’s agricultural exports are sent to the North. Northern Ireland voted with a 56% majority to remain in the EU.

If the UK leaves the customs union, checks at the Northern Irish border would clamp down on agricultural producers like LacPatrick that process goods in the North and in the Republic by adding transport time, duty fees and paperwork for travel between the countries. Employees who commute across the border could be left stranded.

New customs controls are weighted with sensitivities about possibly, or at least symbolically, turning back the clock 19 years after the two countries signed the Good Friday peace agreement and got rid of military checkpoints on the border. Kenny and other government ministers have repeatedly said they will push in Brexit negotiations to keep the border invisible and prevent control posts from going up even if the UK leaves the customs union.

Customs restrictions could make that difficult. The Irish Examiner daily reported last week that the government is already scoping out spots for new customs posts. Kenny has denied the report.

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