Creed on Brexit: ‘The immediate impact will be on beef finishers’

The Minister for Agriculture, Food and the Marine, Michael Creed, says he is engaging with the meat industry “at every available opportunity” to warn of the possibility that the Irish beef industry could be in danger of reaching a “tipping point”.

Speaking on the latest episode of FarmLand, the minister also outlined how the Government has carried out cross-sector scenarios to access the possible impact of substantial UK tariffs being imposed on Irish agri-food producers in the case of a crash-out Brexit.

He described the Government’s current level of preparedness for the UK’s looming departure from the EU as a “damage limitation exercise”.

He also outlined how he “understands” the level of frustration among farmers and farm organisations over a lack of clarity and details available in relation to the emergency support package from Irish agriculture that has been negotiated between Government and the European Commission.

However, he firmly stated his intention to remain tight-lipped on the detail until certainty emerges from Westminster.

“I understand, the Government understands and the commission understands that farmers want certainty. Regrettably, I can’t bring certainty to a situation until I know whether the UK crashes out or whether they approve the withdrawal agreement.

“What we have been doing since June 23, 2016, is creating the awareness of the agriculture sectors’ exposure to the UK market.

There is a clear understanding now, as evidenced by the commission’s own document published for Brexit contingency, that we are the most exposed sector.

“I can understand the frustration at farmer level, farm organisation level and indeed at the processing sector. What we don’t know yet is what will be the impact of a no-deal Brexit,” he said.

In response to the UK’s recently published temporary tariff regime that would be place on Irish agri food exports into the UK post a disorderly departure, Minister Creed said cross-sector impact scenarios have been carried out.

“We have modelled a whole lot of scenarios and we have a good idea of where the impacts will be.

In the beef sector the immediate impact will be for finishers.

“What will be the consequences for people going out and buying weanlings at the moment? We have an idea of that; but we don’t know exactly what the landing spot will be or what the price will be paid.

“But, I am satisfied absolutely that that commission knows that there is a big price tag following a crash-out Brexit, and so does the Government, so the response will be a collaboration between both to make sure that he supports will be provided.

Brexit is a damage limitation exercise. The contingencies will not make up for the downsides of Brexit.

“I am satisfied in terms of the beef sector, which is particularly exposed – almost 300,000t of our beef, half of it, going into the UK market – and I’m very satisfied that, in terms of the analysis, that we will be able to deliver supports quickly and directly to the sector,” he said.

Beef prices

However, when it comes to possible impact on beef prices at Irish plants, Minister Creed says he is engaging with the industry at every available opportunity.

“But we don’t know at this stage what the immediate impact will be – will the price fall by 5c/kg or 50c/kg – how much of that will be absorbed by the UK retailer, by the UK consumer or how much will be pushed back down the line to Irish processors and Irish primary producers?

“They are the issues that we don’t have certainty on and that applies across all the sectors – whether its poultry, or pig, or dairy.

At every available opportunity I engage with the industry and I remind them that this relationship is two dimensional.

“You cannot have a beef industry – a global player, we are the biggest net exporter of beef in the northern hemisphere – you cannot have that if you do not have a healthy primary production sector, if you do not have farmers that are successful in making profits.

“I have repeatedly said to the industry, even in the context of very difficult market conditions, that they must be conscious all the time that there is a real danger that you’ll reach tipping point in the industry.

If we could get the uncertainty of Brexit out of the way, I’m sure we could look at a new horizon for the industry.

“It is, in a way, the perfect storm because apart form Brexit we have had the overhang on the beef market from the difficult year weather wise and as a consequence of the increased kill across Europe and that is still hanging in the market.

“We can see what a drag the overhand of dairy can be on the market with the skimmed milk powder, fortunately we’ve cleared all that on the dairy side, but there is an overhang on the beef market which is a problem,” he said.