Attempting to switch Irish beef exports over to the EU to reduce our dependence on the UK market “is not easy” and is likely to see less returns, an economist has warned.

Con Lucey, a former chief economist with the Irish Farmers’ Association (IFA), has compiled a report outlining the effect the UK-New Zealand Free Trade Agreement (FTA) – signed in October – will have on the Irish agri-food sector.

The report, carried out for the Institute of International and European Affairs (IIEA), explains that the EU beef market is a “mature market”, with well-established supply chains, many of which are relatively local.

As well as that, the EU has a surplus of beef production since the UK left, while EU beef consumption has been broadly flat in recent years.

Therefore, switching Irish exports from the UK to the EU “is not easy and likely to be less remunerative than the current UK market”, Lucey finds.

Lucey sites data from Bord Bia which shows that the market in Britain has higher cattle prices than any EU country, and continues to be the largest and highest-priced market for Irish beef exports.

The implications of the UK-NZ FTA – as well the UK-Australia FTA agreed last summer – are that these countries will gain a foothold in the UK beef market, with the risk that UK market price will be eroded by the extra beef.

The report notes that the UK beef market consists of three elements, namely retail, manufacturing and food services.

In retail, Irish beef is well integrated into the British market, and British and Irish beef are viewed as being interchangeable, based on shared production standards and shared companies.

Similarly in the manufacturing sector, which is important for the lower-value cuts, strong commercial arrangements are in place between the main Irish processors (who also own processing facilities in Britain) and the main market players.

Therefore, Lucey argues that Ireland’s position in the UK market is most vulnerable in the food services sector, particularly the lower-price element of the sector, as it would be more attracted to lower-cost imports.

Generally, the Irish position in the UK market may not face a major threat in the short-term (assuming the EU-UK Trade and Cooperation Agreement – also known as the Withdrawal Agreement – broadly remain in effect).

The greatest threat for Irish beef in the UK market, according to Lucey’s report, is that the UK’s two FTAs with Australia and New Zealand set a trend whereby the UK pursues further FTAs with other big beef producers, such as the US and Brazil.