Brexit could cost agri-food sector €800m, says Teagasc expert
Teagasc has just published a report on Brexit, authored by Dr Kevin Hanrahan.
In brief, while Ireland is less dependent on the UK than it was when entering the EEC in the 1970s, Britain still takes 40% of Irish agri-food exports.
And Brexit implications go far beyond the damage to the existing trade.
“Between now and 2025, the UK population is to grow by around seven or eight million people; that represents a big trading opportunity for Ireland,” said Dr Hanrahan.
“Back in the 1970s, we were so dependent on the UK we wouldn’t have been allowed into Europe without them.
“They are still our nearest neighbour, and they’re the closest to us culturally.
“We currently processes a billion litres of Northern Irish milk annually, going into Irish butter and cheese. Irish cheese now going into global markets is stamped ‘country of origin — EU’.
“With Brexit, that labelling would be very problematic. How will we process milk?
“Some co-ops own plants on both sides of the border. Unwinding those arrangements will be very challenging.”
UK exiting the EU would set a clock ticking from June 23, with two years of talks about future trade relations.
“What form would future relations take? Nobody really knows,” said Dr Hanrahan.
A future UK-EU trade deal could most see the UK exit the EU but stay within the European Economic Area.
The EU has free trade with Norway and Switzerland; but, while both participate in EU research projects, these deals exclude food trade.
Post-Brexit, Britain would probably import vast quantities of cheap South American beef.
Would current Irish, UK and EU quality and traceability systems survive this cost competition? How heavily would Irish meat processors be impacted?
Dr Hanrahan spoke at the Teagasc and Agricultural Economics Society of Ireland seminar in Backweston, Co Kildare.
Hovering over the seminar was a 42%-43% split of UK citizens for and against Brexit, with a handful of undecideds.
Irish hopes will look back to the UK’s referendum on Scottish independence, in which a late swing in voter opinion saw the status quo win the day.
“The UK business community favours staying in the EU, but they are in a secondary position,” said Dr Hanrahan.
“This public referendum has been on the horizon ever since David Cameron made a pre-election promise to hold it. People have been debating it for two years, and UK public opinion is split.”
While Dr Hanrahan’s report has a strong agri-food focus, it also analyses Brexit from a broader economic viewpoint.
Irish agri-food exports to the UK make up €4.5bn of the sector’s total €11bn exports.
While a huge employer, agri-food represents a relatively small share of Ireland’s total €92bn merchandise exports.
In any case, any societal concerns for Irish agri-food workers are a mere blip on the UK’s macro-economic radar.
The UK had a €24bn trade deficit in agri-food products in 2014. While the UK imports a lot of food, it exports far more merchandise.
The UK’s total exports exceed €450bn annually.
Irish business is heavily dependent on UK imports. Total Irish merchandise imports came to €61bn in 2014, of which €20.6bn from UK.
While deeply dependent on the UK, Ireland will be a mere spectator in any future post-Brexit UK-EU negotiations on future relations.
“Would Ireland be allowed to have a special relationship with the UK after Brexit? In a word, no,” Dr Hanrahan said.
“As an EU member, we will have to play by the same rules as the rest of the club.”
