WHO’D BE AN IRISH FARMER?
Looking at the plodding blundering antics currently emanating from London, with all it implies for the final outcome on Brexit, it struck me that, historically, this was how many wars started – misunderstandings (at times wilful), indecision, unwillingness to compromise, and a tendency to let the shouts of hotheads prevail over the voices of reason. There is no risk of a war, of course, though in the worst case scenario relations between the UK and the EU Twenty Seven post March are likely to be bruised and damaged, which does not augur well for future negotiations on trade. The British electorate (or the 52% who voted “Leave”) were sold a pup over Brexit; the sad reality is that nobody in power is now shouting “Stop!” To adapt a phrase of Churchill “never have so many been led astray by so few for so little good reason.”
Public and political attention in Ireland is increasingly focussed on Brexit, which should be a reality by the end of this month unless the hapless May government secures some postponement. We in Ireland can effectively only stand and wait, caught between the proverbial rock (a No Deal Brexit) and a hard place (some deal patched up on the basis of the negotiated settlement of last November) with the dawning reality that not only is collateral damage coming our way for certain (the magnitude the only imponderable) but some form of hard border between the two parts of Ireland looks increasingly likely. It may turn out not to be a military border but controls of some form there certainly will be as Europe lines up in a different configuration, with Britain a third country and Ireland the EU’s frontier. The circle could never be squared adequately were Britain to leave the both the Single Market and the Customs Union.
Even in the event of an eleventh hour deal on the Backstop, it has now dawned on the people on this island (both parts) that serious dislocation, inconvenience and economic hardship (to varying degrees) will threaten in any event. Emergency legislation is being rushed through to meet the worst case scenario but given the uncertainty much of this is being done in a partial vacuum. Even relatively minor items such as cell phone roaming charges, including for smart phones, will be touched as Britain falls into the category of “third country.” More serious could be shortages of medicines and some foodstuffs as supply lines are strained and even fractured. Looming also is the threat of price increases as tariffs are threatened and regulation and documentation replace what had been barrier free trade.
Hardest hit will be Ireland’s agricultural sector which is likely to be most immediately – and seriously – hurt by Brexit. While we have prospered from foreign direct investment and the multinationals established during the last generation or so, Agriculture remains our largest indigenous industry, the backbone of the native economy. Some statistics: the agri-food sector accounts for 7.8% of national Income, over 8% of total employment (roughly 170,000), 22% plus of industrial output and 10% plus of merchandise exports. Last year agribusiness exports totalled €12.1 billion, down slightly in value terms but up in volume. And of that export figure €4.5 billion went to the UK. Therein lies the rub. 40% of the total consists of beef and dairy exports, with Britain taking a whopping 50% of our total beef exports and one third of dairy exports. Total agricultural trade both ways with Britain was €8.5 billion in 2016, with Ireland enjoying a surplus of €1 billion.
The effects of Brexit on this sector could be catastrophic. The hurt actually began in the immediate aftermath of the 2016 referendum, as the value of Sterling lurched downwards by 10% against the Euro. The impact on Ireland’s food exports to Britain was immediate, with exporters’ incomes hit and some price sensitive sectors (e.g. mushrooms) devastated. Established trade patterns and flows between Ireland and Britain, and between the two parts of Ireland built up over decades, were damaged (at my son’s wedding in late 2016 a border farmer commented wryly on the new situation – his income from cross border trade 10% down). In a highly competitive industry – beef and dairy – and at a time when margins were already under strain, such a situation is unsustainable in the long run. Since then Sterling has yo-yoed, but never regained its previous high and most commentators see a further significant decline depending on how the exit fiasco eventually pans out.
Reviewing the prospects post- Brexit the words of Luke come to mind “If they do these things in a green tree, what shall be done in the dry?” Factor in the further likely fall in Sterling, the need for Britain to protect its own agricultural sector, with the looming possibility of protectionist tariffs, WTO tariffs should there be a hard Brexit and the overarching introduction of the bureaucracy inevitable with the reintroduction of a custom regime, and the prospects for Irish agriculture look bleak, with industry spokesmen warning of developments on a scale from tough to catastrophic.
That, unfortunately is not all. Ireland’s other agribusiness exports, amounting to €7.5 billion, are divided roughly equally between exports to the rest of the EU and the rest of the world. The “land bridge” via Britain has been the major conduit for getting these goods ( and other non-agricultural exports) to market, particularly those bound for the EU. Fine when Britain was an EU member; but how and to what extent the land bridge will work out with Britain as a third country remains to be seen. And what if (perish the thought!) relations between Britain and the EU or Ireland were to deteriorate sharply over trade or political ends? What price then for a smooth transit via the land bridge?
Emergency relief and a relaxation of EU rules is being sought for the agricultural sector from Brussels but how substantial and how effective remains to be seen, while further down the line our farmers (and others) face the prospect of substantial cuts in future EU farm supports as a direct result of the disappearance of the UK and its large net contribution to the EU budget.
As if that were not enough, there is Climate Change. The increasingly vocal and strident environmental lobby here has the agricultural sector – and specifically the beef and dairy sections – in its sights. At present Ireland is highly unlikely to meet its 2020 emission reduction targets, in part a legacy issue from the 2008 bust. One third of Ireland’s greenhouse gas emissions come from agriculture and most of this is methane generated from cattle. Methane is twenty three times more harmful than Carbon Dioxide and contributes significantly to the 18% share agriculture contributes to total greenhouse gas emissions worldwide. Hence the calls from the lobby to reduce meat consumption and demands that Irish farmers switch production away from livestock. The Earth may already have passed the tipping point for permanent environmental damage, but with 1.5 billion cattle worldwide (20% in India alone), even slaughtering the total the Irish herd of 7 million is hardly going to save the planet! Yes; who’d be an Irish farmer?