Impact of Brexit on Irish agri-food industry
The UK’s decision to leave the EU has prompted fear and doubt within various sectors of the Irish economy, particularly in that of the agri-food sector. While the full extent of Brexit cannot be quantified at this stage, there are some facts which pose major threats to Anglo-Irish trade relations. At present, Ireland and the UK enjoy a largely symbiotic trade relationship thanks to the Common Travel Area (CTA) which allows ease of movement of both people and goods. However, as Britain leaves the EU and consequently the single market, this mutually beneficial arrangement is at risk of being removed.
When compared to its European counterparts, Ireland is in a particularly vulnerable position should a “hard” Brexit be introduced. According to the Irish Farmers Association (IFA), Ireland exports €4.1 billion worth of food and drink to the UK per annum, with over half of Ireland’s total beef exports, as well as approximately a third of total dairy exports, bound for the UK market. Total external trade with the UK accounted for 37% of Irish GDP in 2016 and the agri-food sector is responsible for some 43,000 jobs in Ireland.
The IFA has also warned that the potential introduction of tariffs outlined by the World Trade Organisation would result in an uneconomical trade relationship between Ireland and the UK. For example, fresh, boneless beef was the most profitable trade good in 2015 and was worth €540 million. Had the recommended WTO tariffs been applied, this would have been subjected to a tariff of 64%, and would ultimately cause the demise the Irish exportable beef trade.
There are also fears amongst the Irish agri-food sector that the UK may opt to strike a trade deal with a non-EU country, regardless of whether tariff-free access between Ireland and the UK is protected. Although Brexit negotiations are just commencing, this fear and uncertainty has already caused sterling to weaken – the Irish beef industry was hit with a loss of €150 million in the second half of 2016 alone. This damage to the Irish agri-food sector has caused a loss of confidence for producers and has impacted on their ability to plan.
While the full extent of Brexit is unknown, the industry is looking at short to medium term measures, including Lean operations, product innovation and market diversification to attempt to mitigate against some of the potential backlash. Ireland’s ability to respond domestically is limited and it is hoped that the current trade relationship will be respected and maintained in the upcoming Brexit negotiations.