‘Ireland should increase Bord Bia funding and seek EU support to combat Brexit’

The Irish Government should increase Bord Bia’s Brexit funding and seek EU support to mitigate against the damage caused by Brexit on the island of Ireland, a new paper recommends.

The British Irish Chamber of Commerce’s Agriculture and Food Committee today published a paper on the impact of Brexit on the Irish agriculture, food and fisheries sector.

The committee will be submitting the paper to the Oireachtas Committee on Agriculture, Food and the Marine.

The paper outlines the likely impact of WTO tariffs on Irish – UK trade in the agri-food sector as well as addressing potential trade costs associated with non-tariff barriers being implemented through customs checks, rules of origin checks and diverging regulations.

When looking at possible WTO tariffs there are two types of tariffs – ‘Bound Tariffs’ and ‘Applied Tariffs’. The Bound Tariff is the maximum tariff level for a given commodity line that can be applied by a ‘most favoured nation’.

If the UK were to subject the EU to Bound Tariffs, the paper found it could see tariffs applied on Irish agri-food as high as 60% for products such as beef.

What is far more likely is a reduced MFN tariff being ‘applied’ to both the EU and other low cost countries. In this scenario, the paper outlines that Irish meat exporters in particular would face increased competition from countries such as Brazil and Argentina.

This could reduce Ireland’s market share in the UK while potentially driving down Irish beef prices.

Any restriction on current trade practices between Ireland and the UK will be particularly negative for the Irish beef sector as well as for cheddar cheese exports and butter exports, it found.

The paper has several recommendations on what it thinks needs to be done in order to prepare for Brexit:

Specific strategy to address the fallout from Brexit for all-island agri-food businesses

The agri-food sector is the most integrated sector across both jurisdictions on the island of Ireland. It has effectively operated as one jurisdiction over the past 10 years.

Any tariffs or customs introduced post-Brexit will have a significant impact on numerous industries within the sector that operate on an all-island basis.

The Chamber believes a specific strategy should be developed to address the fallout from Brexit for integrated cross-border businesses.

The cost of reversing agri-food integration has yet to be fully examined, but such a study would be most beneficial for the sector, in determining the UK, Irish and Northern Irish Government’s response.

Reduce employer PRSI to reduce costs for agri-food employers

The Government reduced the lower rate of PRSI as part of the ‘Jobs Initiative’ introduced in 2011.

This scheme expired at the end of 2013. The Government should consider re-introducing this initiative, according to the paper.

Expand Bord Bia’s Marketing Intensification Programme

Bord Bia’s Marketing Intensification Programme (MIP) was established following Brexit with a specific purpose to provide targeted marketing support to companies with high dependency on UK markets.

Under the current programme the fund is approximately €660,000 and will support 32 companies. The current grant is targeted at Irish food and drink producers that operate with a turnover between €1m and €30m and that export at least 20% of their turnover to the UK.

The Chamber is proposing that this programme’s budget be increased to €2m with the criteria adjusted for turnover of €250,000 to €30m and that export at least 10% of their turnover to the UK.

The Chamber proposes that this grant increase should be in addition to the existing Bord Bia budget. The Chamber would also propose that Bord Bia should receive increased funding to specifically promote the quality and sustainability of Irish Food and the Origin Green programme in the UK and in other key and emerging markets.

The Irish Government should seek direct EU support as a consequence of the impact Brexit

The recent de-valuation of Sterling has effectively wiped out the profit margin for many agri-food exporters. Article 219 of EU regulation allows for direct EU support to be given through CAP Market Support measures in order:

“To resolve specific problems, and on duly justified imperative grounds of urgency, relating to situations likely to cause a rapid deterioration of production and market conditions.”

The paper recommends that the Irish Government on behalf of the agri-food sector should seek direct EU support as a consequence of the impact of the referendum result on the sector.

Speaking ahead of the publication of the paper John McGrane, Director General of the British Irish Chamber of Commerce, said the Chamber fully supports this work carried out by the Agriculture and Food Committee as it clearly highlights the importance of the UK as the leading destination for Irish agri-food exports.

“It is of mutual benefit to the UK and the EU and of upmost importance to the Irish agri-food sector that the EU and the UK agree an all-encompassing Free Trade Agreement that includes agriculture.

“The Irish Government and Minister Creed must continue to press the Irish case in Brussels that a bad deal for the UK could have detrimental consequences for Ireland.”

Ireland’s agri-food sector:

The agri-food sector is Ireland’s largest indigenous industry. It employs around 250,000 people including 100,000 family farms.

Irish food and drink is sold in more than 175 markets worldwide. Irish exports in the agri-food sector amount to €10.8 billion, however the UK remains by far the biggest importer of Irish agri-food representing 47% of total agri-food exports amounting to €5.1 billion in 2015 (CSO, 2016).

To put this into perspective, the other 26 countries of the EU represent 31% of Irish exports or €3.4 billion, the rest of the world represents 22% of Irish agri-food exports or €3 billion (Bord Bia, 2015).

Maree Gallagher, Chair of the British Irish Chamber of Commerce Agriculture and Food Committee added that there has not been and will not be an Irish sector more affected by the outcome of the UK referendum to exit the EU than the agri-food sector.

“We welcome the Government’s initial response through Budget 2017, but more supports are needed for the sector.”

This is an integrated all-island sector that operates efficiently and seamlessly through the invisible border.

“Therefore, an all-island sector requires an all-island response that is why we are specifically are calling for an all-island strategy for the agri-food sector to address the consequences of Brexit,” she said.