Farmers set to lose €400m unless beef given sensitive product status

IRISH beef farmers could lose as much as €400 million a year if beef is not given sensitive product status by the EU under any future World Trade Organisation agreements.

Tue, 30 Sep, 2008 - 01:00

A new Teagasc study on the impact of WTO on Irish agriculture by Teagasc economist Kevin Hanrahan said while some agricultural sectors would not be significantly affected by a World Trade Organisation agreement, it would have significant negative consequences for agricultural income in Ireland.

The drop in farm incomes would be caused mainly by the decrease in beef prices and production that would occur as a result of increased imports of beef into the EU.

Teagasc economist Trevor Donnellan said that, in contrast to beef, EU prices for most dairy and cereal commodities are quite close to international price levels.

This means that reducing the level of import tariffs would leave commodities produced outside the EU uncompetitive in price terms on the EU market.

“To address the vulnerability of the EU beef sector to increased imports, EU negotiators have stated that they will ensure that beef is made a sensitive product. This could limit the reduction in beef tariffs to 23%, considerably lower than the likely 70% general reduction proposed.

“Even with sensitive product status for beef, imports into the EU are projected to increase by 30% and consequently Irish beef prices and output are projected to fall. This would result in a loss of €120m per year for Irish beef farmers. Without sensitive product status the report finds that the loss to Irish beef farmers would be much greater, amounting to almost €400m per year,” he said.

The Teagasc economists said that in the dairy sector the main impact of WTO reform would be felt through the loss of export refunds for dairy products. This would mean that the intervention support price for butter in the EU would need to decrease.

In advance of any WTO deal, the European Commission has already set about reducing its expenditure on dairy export refunds.