Emergency intervention for beef ‘sidelined’ as focus shifts to ‘targeted payment’

In the context of a disorderly (no-deal) Brexit, the Department of Agriculture, Food and the Marine is now setting its sights on targeted EU financial aids for the beef sector, rather than intervention, AgriLand understands.

Despite pressure from farm bodies to secure beef intervention measures ahead of the UK’s departure and potential crash-out of the EU on March 29 without a withdrawal agreement, it is believed that the Minister for Agriculture Michael Creed does not consider intervention as the best tool with which to proceed.

In the case of a hard (no-deal) Brexit, EU intervention on beef would basically result in taking the product – in this case approximately 250,000t of Irish beef is exported to the UK annually – and putting it into cold storage. In other words, the move that would essentially suspend the market.

With a current reference price fixed by EU Council Regulation set at an exceptional low of just €2,224/t (or circa 222c/kg), it is now considered that intervention would simply further depress the market.

And so, it is understood that the focus is now fixed on exceptional aid options under the Common Market Organisation (CMO) framework where a targeted payment support for beef could potentially be weighted on the extent of a price drop if a no-deal Brexit ensues.

Although no specific figure has been tabled on this potential support mechanism, the Irish Farmers’ Association has previously claimed that for each 5c/kg change in cattle prices, farmers would need a €20/head direct payment support.

€2,224/t

In a statement, a spokesperson for Minister Creed outlined the department’s position on what it considers the most pragmatic and efficient solution to protect the beef sector from a possible WTO-style Brexit outcome.

“Intervention is available for fresh/chilled beef, butter and skimmed milk powder. The commission acts as a buyer of last resort, offering to buy a limited volume for a set price.

At the current reference price (fixed by EU Council Regulation at €2,224/t) intervention would not provide adequate support for a beef price collapse.

“The CMO Regulation also provides for exceptional aid measures to manage serious market disturbances.

“These exceptional aid measures were used, for example, to support farmers in the Baltic member states, when the Russian embargo suddenly cut off their main market in 2014.

In these cases, the amount of EU aid granted was weighted based on the extent of the price drop, the level of exposure to the affected market and the loss of value of exports.

Although a resolution on an agreeable withdrawal agreement across all parties – the EU, UK and Ireland – remains far from reach – particularly due to the backstop conundrum in Northern Ireland – it is understood that the possible implementation of an emergency targeted payment would allow beef to continue flowing into the UK if a possible new future trading relationship was to be established between the sides.

Last month, the European Commission affirmed that EU law provides for a variety of instruments to cope with the most immediate effects of the withdrawal of the UK – particularly in a no-deal scenario.

It has stated that the CMO regulation provides for a variety of market supports that can offer a limited safety net for commodity products.

These include: intervention aids; private storage; and exceptional aid measures in order to manage serious market disturbances.

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