Northern Irish farmers will be the hardest hit by the Brexit fallout given the agriculture sector’s dependence on EU customers and the potential loss of billions of euro in grants, according to a leading economist.
Professor Michael Curran, an economist at Villanova University in Pennsylvania, said that while the UK’s decision to leave the EU was “unambiguously bad” for Ireland and the UK as a whole, Northern Ireland would be hardest hit.
In particular, Northern Irish farmers who count on the EU for more than 80% of their income would feel the brunt of the fallout, he said.
“In terms of agriculture, the Republic of Ireland itself accounts for about 33% of Northern Ireland’s goods exports, and most heavily in terms of agriculture. About 82% of farm income in Northern Ireland comes directly from the EU; from the Common Agricultural Policy (CAP) grants.
“Now, that’s something that’s pretty much going to go as soon as they’ve actually implemented Brexit. So that’s massively going to impact upon the agricultural sector from a Northern Irish perspective,” he said.
From 2014 to 2020, it’s estimated the agriculture and rural sector in Northern Ireland was set to receive €2.53bn from Europe.
Farmers in the North were divided over whether to remain part of the EU or take their chances without the support of the CAP grants — which will remain until 2019 regardless — and easy access to the EU market.
The North’s largest unionist party, the Democratic Unionist Party (DUP), campaigned for a leave vote while the Ulster Unionist Party (UUP) came out in favour of remain.
The Ulster Farmers’ Union (UFU) declined to take a position throughout the campaign but since the result have issued a list of 10 post-Brexit priorities.
The union said it wants “the best possible access” to the EU market, action to ensure local food production isn’t disadvantaged by cheap imports and a commitment from Westminster to replace the CAP grants with government support while also maintaining existing levels of financial support from London.
Prof Curran also warned that the potential reintroduction of border and custom controls would significantly dent Northern Ireland’s GDP: “Some research has shown… that just these non-tariff barriers could raise costs for NI farmers by between 2% and 4% and a recent study by the Centre for Economic Performance (CEP) found that a 2% increase in non-tariff barriers could actually reduce [the North’s] GDP by 1.4% in the long-run.”
The eventual trade deal struck with the EU will ultimately determine the degree to which Northern Ireland’s agriculture sector is hit by Brexit.
The best-case scenario would be a Norwegian-style deal with access to the European Free Trade Area and membership of the European Economic Area.
The worst scenario would see no preferential trade deal struck between the UK and EU and the imposition of tariffs of up to 5% on exports which Prof Curran said he was “almost 100% sure” wouldn’t happen.
He also warned that a special deal between Ireland and the UK is highly unlikely, saying “we cannot return to the kind of trade agreements that existed pre-EU membership in 1973 which provided special access for agricultural products. That’s not legally possible anymore because of the [EU] treaties.”
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