General
Issues related to agriculture, farming and the food sector have already been thoroughly considered by the Joint Committee on Agriculture, Food and the Marine in their February 2017 Report ‘Impact of the UK Referendum on Membership of the European Union on the Irish Agri-Food and Fisheries Sectors’. But in order to consider any more recent thoughts and to consider the linkages with other policy areas, the Committee held a number of Sessions related to Agriculture.
The importance of agriculture and agri-food businesses to Ireland is well-known and as well as the sector’s significant importance to the rural economy. It is clear that “Ireland is the EU economy that will be the most impacted by Brexit, and farming and agri-food will be the most impacted sector”.
The UK is an important buyer of much of Irish agricultural produce, both fresh and processed.
Overall 40% of Irish agri-food exports go to the UK: 50% of Irish beef, 33% of dairy products, 50 % of pigmeat products and 90% of mushrooms.
For the UK, Ireland is an important supplier of food and the Committee heard that Ireland:
– supplies 26.25% of the beef and veal consumed in the UK (nine times as much beef is sent to the UK from Ireland as to any other individual country);
– is largest supplier of sheep meat into the UK; and
– is an important supplier of dairy products.
Discussions around Brexit have brought into sharp focus the level and depth of the integration of the supply chains of many agricultural products, especially in border regions with products in different stages of development going across the border in both directions to be processed, packaged or further developed. Often the same product travels over the border and back before finally being sold.
Committee Evidence
Because of the importance of the sector to Ireland and the interconnectedness of the markets, the Committee heard, quite starkly that “Brexit could represent one of the largest competitiveness shocks that the Irish agri-food industry has faced86”. The challenges for the agri-food and farming sector were identified as:
– the potential loss of access to the UK market for Irish products without facing very high tariff rates;
– ongoing currency volatility;
– massive disruption to the all-island supply chains;
– potential customs difficulties using the UK as a land-bridge to access other EU markets;
– potential future differences in standards or product rules (like packaging and labelling for example);
– knock-on impacts on farms and farming incomes; and
– a potential impact on CAP funding.
The Committee explored with a number of the stakeholders the impact of potential tariff barriers (should there not be a Free Trade Agreement with the UK), as the tariff rates that would apply under WTO Rules for the various food products are amongst the highest tariffs possible and were described to the Committee as “prohibitive and at plausible measures of the responsiveness of trade to prices (what economists call price elasticities) [to] destroy this trade flow”
The Committee heard of the particular concerns of the thoroughbred and horse-racing industries. Both industries are well-developed, highly successful and strongly interconnected, acting in many ways like single industries88, with no replacement market possible for the British market. Many of the potential solutions put forward by stakeholders, were clearly developed to mitigate the potential impact of Brexit changes and to maintain the status quo or the closest possible relationship. More than any other sector that the Committee heard about, the impact on agriculture will depend on the nature of the final negotiated agreement and in particular whether the UK remains within the Customs Union and if a Free Trade Agreement (which includes agricultural products) is agreed between the EU and the UK.
Potential Solutions
Customs Union/Single Market
– The Government should advocate strongly for the UK to re-consider its original position and consider remaining a member of the Single Market and/or Customs Union.
– Should the UK leave the Single Market and/or Customs Union, exploration of ways in which Northern Ireland could remain in the Customs Union completely, or solely for agricultural products is required.
Free Trade Agreement
– Ireland should advocate for the EU to conclude a Free Trade Agreement between the EU and the UK, which includes an agricultural chapter in advance of the UK’s withdrawal. In the event that this is possible because of lack of time, transitional periods should be supported.
– The Agreement should address the conditions and standards under which the UK imports food products from outside of the EU that do not meet similar high health and safety standards.
Transitional Arrangements
– Consideration should be given to transitional arrangements. Negotiations to develop Free Trade Agreements are often long, detailed processes that cannot be rushed.
State Aids
– Relaxation of state aids on farming and agri-food industry is required.
Legislative Equivalence
– Efforts should be made to ensure that legislative equivalence is secured.
Competitiveness
– Efforts to address cost competitiveness should be continued
Market Supports
– In the event of important (Euro- Sterling) currency fluctuation, direct market supports
should be considered.
– Employment subsidy schemes and enterprise stabilisation measures should be reintroduced.
Support for Innovation, Market Diversification and increased capacity
– The Government should consider increasing supports for the development of new products, addition of new attributes to existing products, and increasing knowledge transfer.
– Companies should continue to be assisted and supported in entering new markets as well
as increasing their share of existing markets.
– Consideration given to increasing the budget of Bord Bia and other relevant bodies to
support companies.
– The Irish Government should continue to review and improve supports aimed at increasing
the capacity, efficiency and productivity of the sector.
EU Budget
– A strong CAP within the EU Budget after 2020 is required.
Horse racing and thoroughbred
– Maintain the Tripartite Agreement.
Possible Outcomes
Customs Union/Single Market
While the Committee respects the stated policy of the UK Government to leave the EU, the Single Market and the Customs Union, as the pragmatic implications of that decision become clearer, the Irish Government and EU partners should advocate for the UK to re-consider and remain within the Single Market and/or the Customs Union.
Free Trade Agreement
Should the UK, in the final agreement, withdraw from the Single Market and the Customs Union, a Comprehensive Free Trade Agreement that includes food and agricultural products will be needed.
Tariff rates on food and agricultural products need to be at 0% or at minimal rates.
Any Free Trade Agreement should include a commitment to match EU health and safety standards for UK products, and for products coming into the UK.
Transitional Arrangements
Negotiations to develop Free Trade Agreements are often long, detailed processes that cannot be rushed. In the event that the EU-UK negotiators believe that a full and comprehensive free trade agreement cannot be reached within the timeframe of the UK’s withdrawal, transitional arrangements should be agreed.
State Aids
Relaxation of state aids on farming and agri-food industry. Consideration of re-classifying the thoroughbred sector as ‘agriculture’ for the purposes of state aid rules.
Legislative Equivalence
Efforts should be made to ensure that legislative equivalence is secured at the moment of Brexit and beyond in areas of animal health and safety, zootechnical and equine identification certification and temporary admission of animals.
Particular attention needs to be given to those with farms with land that straddles the border. An allIsland approach to animal health issues has been successful and such cooperation needs to be continued and supported in the future.
Competitiveness
There is a need to maintain a focus on cost competitiveness and the cost of doing business in Ireland, with a focus on the costs associated with energy, insurance, financing and legal costs.
Market Support
The Agri-Food Industry and the farming community have already seen the immediate impact of strong currency fluctuations between the Euro and Sterling. In the event that markets are very unstable in advance, and immediately following, Brexit, the Government and the European Union should consider putting in place direct market supports for vulnerable sectors such as farmers, possibly through CAP Market Support.
During the financial crisis, an employment subsidy scheme was developed and enterprise stabilisation measures were applied. If the impact of Brexit is near the scale anticipated, these should both be re-introduced.
Support for Innovation and Market Diversification Irish Agricultural products can be complex and produced to the highest standards. In developing new products and new attributes to existing products, the Government should consider increasing supports to innovation and knowledge transfer.
Irish food companies need to continue to seek to diversify the markets in which they sell. TheCommittee heard that this was a long-term process which is complex, often reliant on:
– developing a keen understanding of the ‘tastes’ of different populations;
– guidance on market access; and
– promotion.
It may be necessary to increase the budgets of Bord Bia and other Agencies in order to support companies in exploring new markets. Support for measures which can increase production capacity should be included in this increased support.
EU Budget
As a large Member State, the UK contributes significantly to the EU Budget. The Common Agricultural Programme (CAP) is due to be reviewed for the period after 2020. It will be essential that a strong CAP is supported in the EU Budget after 2020.
Horse racing and thoroughbreds
A tripartite agreement exists between the UK, Ireland and France for the free movement of thoroughbred horses. The Agreement predates EU law in the area and an assessment needs to completed by the relevant authorities to ensure that it is fit for purpose after the UK withdraws from the EU. In the event that the UK does not join the Customs Union, clear and separate protocols for the movement of live animals, especially thoroughbred horses moving through customs checks need to be agreed.
An additional fast-track for vehicles carrying sensitive thoroughbreds through customs checks should be considered. The Committee heard that consideration should be given to the creation of a new type of visa between the UK and Ireland for ‘professional sportsperson’ to permit jockeys to move easily through both jurisdictions.
This Article draws on Seanad Special Select Committee Withdrawal of the United Kingdom from the European Union Brexit: Implications and Potential Solutions June 2017. Irish public sector information is reproduced pursuant to PSI Licence; Conditions of Re-Use of Public Sector Information. The Legal Materials contain Irish Public Sector Information licensed under the Irish Licence which is at http://circulars.gov.ie/pdf/circular/per/2016/12.pdf.
