Food exporters count the cost of Brexit disruption

Major new veterinary certifications needed for Irish meat exports to UK from April 1

Freight trucks at Dublin Port: industry says Brexit holdups at ports and extra bureaucracy will add at least 8% costs to value of food exports.

Agri-food co-ops say they face an increase in Brexit- related costs of at least 8%.

Academic research has also indicated a cost of 8-13% of the value of exports, mainly relating to the costs of customs procedures, compliance with sanitary and phytosanitary (SPS) requirements, costs of transit, and certification requirements.

These costs are likely to be higher in the short term, ameliorating over the medium to longer-term as firms learn and adapt to the new requirements, said Agriculture Minister Charlie McConalogue in the Dáil last week.

“It has always been clear that there is no good Brexit for the agri-food sector,” said the minister.

“While the avoidance of tariffs is hugely significant, the trading relationship has changed and non-tariff barriers will inevitably create costs to trade.

“The impact on farm incomes will depend on how non-tariff barriers translate into additional costs of doing business with the UK, over the next year in particular, and how those costs are absorbed along the value chain. It is not possible to accurately predict the effects on annual farm incomes. However, my department is closely monitoring the situation in relation to farm incomes.

“I, along with the rest of Government, stand ready to provide the necessary supports for impacted sectors, including through funding from the EU’s Brexit Adjustment Reserve.”

So far, food exporters from the UK to the EU seem hardest hit. But major new veterinary certification requirements for Ireland’s meat exports to the UK will be needed from April 1.

Similar requirements have led to some UK produce having to be dumped after port holdups on the Continent.

Meat on hold

British meat and fish exporters have had problems with lengthy new customs and health checks, and EU customers cancelling orders.

Pigs’ heads exported from the UK to European buyers to make products like sausages and pâté have been stuck at Rotterdam port for weeks, due to Dutch authorities demanding they be tested for disease.

The British Meat Processors Association said that over 120 lorries were held up at Rotterdam, including a pork lorry stuck there for weeks.

Much delayed meat had to be destroyed and dumped on landfills.

Fish traders whose exports to the EU were disrupted are to get £23m of UK government compensation.

The UK’s National Sheep Association said journeys normally of 24 hours now take 48 hours or more.

However, a refrigerated lorry of lamb carcasses can last up to 40 days.

But UK meat exporters fear EU customers will abandon them and look elsewhere for less troublesome meat imports.

That could present opportunity for Irish exporters. But meanwhile, they are busy trying to cope with Brexit.

“Trade with the UK has now become more expensive for business, despite the agreement reached in December, due to the imposition of new administration and controls for importing and exporting businesses,” said Jerry Long, President of the Irish Co-operative Organisation Society (ICOS).

ICOS represents 130 co-ops employing more than 12,000.

“At minimum, we estimate an 8% cost increase for the agri-food sector as a result of these additional certification and administration processes”.

Mr Long called for funding from Ireland’s €1.05bn share of the EU’s Brexit Adjustment Reserve to mitigate increased costs for the agri-food sector, and support preparation by businesses.

He said there should be a retrospective element to the funding, as many businesses have already incurred very significant costs.

“The UK’s departure from the EU also has brought implications for our all- island dairy economy, as products of mixed milk origin are now unable to access EU market supports and, in many cases, they also cannot benefit from preferential access provided by EU free trade agreements on international markets,” said Mr Long.

He said some funding should go into export trade financing; export credit guarantees; production and logistical capital investment; investment in sustainable agriculture and processing; market research and promotion, via Bord Bia; and recruitment, training and upskilling within businesses.

Mr Long welcomed Ireland’s 25% share of the EU’s Brexit Adjustment Reserve,

“This is in recognition that we are the country most impacted by Brexit.”

He said the agri-food industry is the sector most exposed and impacted by the change in our new relationship with the UK, and that must be reflected in Government decisions on how the funding is used.

Most exposed sector

Food Drink Ireland director Paul Kelly said the Irish food and drink sector is by far the most exposed of any sector in any country in Europe to Brexit.

“Even with an EU-UK deal, we now face additional paperwork, customs and SPS formalities, transport delays and disruption to delivery schedules.

He said the Brexit Adjustment Fund should be targeted at areas such as competitiveness, export capability (including export credit insurance, already provided by many EU governments), direct connectivity to continental markets, and customs skills.

IFA president Tim Cullinan said the association will make a strong case for funding to go directly to farmers, who will take the brunt of any currency fluctuation fallout and trade and logistical issues.

He called for “green lanes”, as implemented previously by the EU for food exports.

The Brexit Adjustment Reserve is valued at €5.4bn, comprising €4.2bn in 2021 and €1.1bn in 2024. Ireland’s proposed initial allocation for 2021 is €1.051bn of the first tranche of the fund.

The Fund, agreed by EU leaders last summer, is designed to help businesses and communities cope with increased costs of trade and lost income, now that the UK is outside the EU’s single market.

The UK is still Ireland’s biggest trading partner for food, and loss of access to UK fishing waters will cause an economic hit to Ireland.

EU Budget Commissioner Johannes Hahn said the reserve fund focuses on member states most affected by Brexit.

Other major beneficiaries include the Netherlands, which will receive €757m, Germany with €455m, and France with €420m.

The EU says the fund will also support those dependent on fishing in UK waters, citizens returning from the UK, and smooth operation of new border and customs regimes.