Irish agri-food hopes riding on Brexit, the biggest gamble of all

By Stephen Cadogan

A big bookmaker in the UK offers odds of seven to four against a Brexit deal being reached before April 1, 2019.

That outcome would probably mean a “hard Brexit”— Britain quitting Europe without a deal, dropping out of the EU single market and customs union.

Odds of seven to four means that someone in Ireland who fears a “hard Brexit” could bet €4 with the bookmaker, and get back €11, if no Brexit deal is reached before April 1, 2019.

In that way, the bettor could cover some of the likely losses to their business which might result, if no Brexit deal before April damaged Ireland’s huge exports to the UK.

Many people in Ireland fear a “hard Brexit”, because the UK is of course the second largest single destination country for export goods from Ireland, and the largest for services exports from Ireland.

The UK remains our most valuable food, drink and horticulture export market, taking goods to the value of €4.5bn, or 35% of our total food, drink and horticulture exports.

It may be frivolous to suggest losses due to Brexit could be covered by betting on what is a proxy for a hard Brexit.

However, Brexiteer leaders and a majority of the British voting public seem to have made the biggest gamble of all, betting the British economy (at seven to four) on reversing out of Europe and into an unknown future.

The bookies say there is only one chance in five (four to one) that the UK will have another EU referendum before April 1, 2019.

They say there is also one chance in five that the UK will apply to rejoin the EU by 2027 (which assumes of course that they have left it in the meantime).

Bearing in mind that the bookmaker’s profit margin is built into these odds, they believe that leaving without a deal is much more likely than a second EU Referendum, or leaving the EU and applying to rejoin.

If they serve no other purpose, the betting odds may concentrate minds on achieving the best Brexit outcome, while preparing for the worst.

Farmers already have their minds on Brexit, with IFA President Joe Healy warning the UK is heading for a hard border and a cheap food policy, in his reaction to last week’s speech by UK Prime Minister Theresa May.

He said the UK could seriously devalue the British market for Irish beef and dairy exports and in turn destabilise the European food market.

High-quality Irish food exports produced to the highest EU standards could be undermined on the British market by cheaper, inferior food products such as Brazilian beef, US beef from hormone-treated cattle, or chlorinated chicken, said Mr Healy.

Brexit is just one of the fronts IFA is fighting on, with the Association also warning that an EU-Mercosur trade deal could bring a major increase in substandard beef imports from Brazil to the EU, at the same time as the serious challenges of Brexit.

There is no betting guide available to indicate how likely such a trade deal is, but the EU and the five Mercosur countries say they will continue to seek a trade agreement, after the latest round of negotiations ended last Friday without agreement.

At least, Irish farmers can take some solace from the Mercosur form book, which shows these negotiations have failed time after time since they began in 1999.

Maybe about three to one would be fair odds against an EU-Mercosur trade deal in the next year.

That means the odds against a hard Brexit and a simultaneous EU-Mercosur trade deal are about eleven to one.

In other words, one could say there is one chance in 12 that the Irish agri-food industry will be grievously damaged in the next year by both a hard Brexit and an EU-Mercosur trade deal, to the extent that huge EU and exchequer aid would be required to support our farmers and food businesses.

That’s why any farmer who has time to watch the racing at Cheltenham next week should pay close attention to the National Hunt Chase at 4.50pm on Tuesday. The horses, and their amateur riders, have to jump 24 fences on a four-mile course. Last year, only 10 of the 18 runners completed the course. Farming is a bit like that, with existential threats at every turn.

However, the good news is that Irish-trained horses won the race in four of the past seven years.

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