Ireland has exported significant amounts of beef to the UK since the 1660s and that will continue despite Brexit, the Chief Executive of Ireland’s largest beef processor has said.
Paul Finnerty, Chief Executive of ABP, told a recent Bord Bia seminar on Brexit that the UK will remain Ireland’s largest export market, but he warned that the pressures will now be around what happens in any trade deals the UK looks to strike.
He said that Brexit has the potential to have very substantial consequences for the industry and ultimately for primary producers in Ireland.
While foreign currency is the first concern, he said, with a cost inflation factor now coming ito the industry, a recession in the UK would be very significant.
“The (UK retail) industry is in a fragile place, with margins halved since the financial crisis. Margins were at 4-6% but they are now at 1% across UK retail. Up to last year, there was less food being sold than seven or eight years prior, as a consquensce of the financial crash.”
Retailers’ Post-Brexit options
He said two views emerging on how the UK retailers deal with Brexit.
One involves pulling down the shutters ‘we’ve made the decision and we make the best of it and a pro-British buying agenda is heightened’.
The other, he said, was that UK retailers will look far and wide for lower-cost products.
The short-term implications of Brexit mean that Irish goods are 16% more expensive in the UK than they were two weeks ago, Larry Murrin, Chief Executive Dawn Food, said.
The Irish agri-food sector means more to Ireland than the automobile sector means to Germany.
“We can’t say this is a resilient sector, that has handled foot and mouth, so it can handle this. That’s not true. This is unprecedented and it’s all hands to the pump if we want to maintain Ireland as one of the best food service markets in the world.”
He said the short-term concern is the impact of Sterling and how that translates into an increased cost of Irish products.
Irish goods in the UK, he said, are 16% more expensive than they were two weeks ago, on the back of the Brexit vote.
He said that increased nationalisation of the Britsh market in the past five years has taken place and while the UK is not self sufficient in many products, they don’t have to buy these products from Ireland. “Overtime they will buy form wherever to have stable product supply.”
Mercosur Post Brexit
Paul Finnerty said that because beef is produced much more cheaply in other parts of the world, there will be pressure for retaielrs to look further afield.
He also said that the time to strike deals is shorter than people are suggesting. He said it is quite possible the UK could look at the Mercosur negotiations, where they are now, and look to strike a deal with the Mercosur countries.
Ireland, he said, must look at accelerating the opening of international markets. “There is lots of talk about China, but we need access to China and efforts in that regard to be accelerated.”