ICOS forecasts €300m annual tariff bill for Irish cheese and butter

The Irish Cooperative Organisation Society (ICOS) has said it estimates that the tariff bill for Irish cheese and butter alone, as a result of a ‘no-deal’ Brexit would be in the region of €300 million a year.

ICOS made the comments as part of its submission to the Joint Oireachtas Committee on Agriculture on the impact of Brexit on Irish agriculture.

ICOS is the cooperative umbrella organisation that promotes commercial cooperative businesses and enterprises, across multiple sections of the Irish economy.

Oireachtas Agriculture meeting

ICOS represents 130 cooperatives, which include multipurpose dairy co-ops, livestock sector co-ops as well as food, fishing and beverage co-ops.

The ICOS delegation to address the Oireachtas Committee on Agriculture comprised:

John O’Gorman, ICOS Dairy Committee chairman and Dairygold Co-operative Society Ltd. chairman;
Alison Graham, ICOS EU affairs executive;
Eamonn Farrell, ICOS agri-food policy executive.

They highlighted the impact a no-deal Brexit would have on exports to the UK market and the price returned to co-ops.

Tariffs

The group said that tariffs will be applied on imports and exports to and from the UK in the event of no-deal, reducing the added value of Irish exports and increasing the cost of imports.

ICOS estimates that the tariff bill for Irish cheese and butter alone will be in the region of €300 million a year and that the total cost facing the Irish agri-food sector is €1.5 billion, describing it as an ‘appalling vista’.

ICOS added that even if a trade deal is agreed, without specific terms providing for automatic recognition of standards, exports to the UK will be subject to new safety and security controls and documentation checks.

“There is a significant cost involved and time needed to fulfil these new administration requirements,” the ICOS delegation said.

Specifically, the current process to obtain an Export Health Certificate for exporting products of animal origin is particularly costly and onerous for businesses and takes up to 10 days to complete before export is possible.

On top of this, ICOS said that it is estimated that it will now take up to 32 hours door-to-door to export to the UK, due to document checks (+3 hours) and physical checks (+5 hours).

“Irish agriculture therefore must continue to diversify its exports away from the UK and therefore also diversify its products to tailor to new market opportunities,” the ICOS submission also declared.

Actions Undertaken by Irish Cooperatives

ICOS said a number of actions have been taken by cooperatives in Ireland ahead of Brexit at the end of the year.

Market diversification: Irish agricultural cooperatives, particularly in the dairy sector, have been in the process of diversifying their export markets for many years. This process has been accelerated as a result of the UK’s decision to leave the EU.

Product diversification: A lot of investment is being made by co-ops in new facilities to enable them to diversify their product portfolios. In particular, dairy processors have taken steps to move away from cheddar cheese, which is highly exposed to Brexit due to the large volumes exported to the UK and the poor opportunities for this cheese type in other international markets.

These processors aim to move part of their milk pool from cheddar production to the production of international cheese types, including, for example, Norwegian Jarlsberg and Mozzarella.

Strengthening foothold in the UK: ICOS said the UK will remain a key market for Irish agri-food products, despite potential future trade difficulties and higher costs.

Due to its close proximity, historical trading ties and already established distribution channels and brand positions, ICOS said it is important that the Irish agri-food sector maintains its strong presence in this high value market.

Actions and supports required

The Oireachtas committee also heard that to aid product and market diversification to further reduce the exposure of the Irish agri-food sector to the UK market, financial support is necessary from the EU Brexit adjustment fund.

ICOS said such aid should be administered in the form of schemes to provide necessary support.

The delegation added that EU trade policy must prioritise achieving new market access to key emerging markets, specifically in Asia and the Middle East and also support product diversification.

ICOS added that EU trade policy must prioritise the inclusion of products produced on an all-Ireland basis in future Free Trade Agreement (FTA) negotiations.

This, it said, can be achieved through the EU seeking to allow ‘extended cumulation’ with Northern Ireland supply chains and products, within the negotiated rules of origin.