Real solutions and compromise will be required in the Brexit negotiations, to safeguard the vital cross-border agriculture trade on the island of Ireland, according to IFA (Irish Farmers’ Association) President Joe Healy.
Speaking from the Virginia Dairy Show today (Wednesday, August 23), Healy said this issue is of deep concern to farmers in the border region.
Each year, thousands of animals and huge volumes of agricultural produce, worth €2.2 billion, move over and back across the border with Northern Ireland for further finishing or for processing, as part of a highly-integrated supply chain, according to the IFA.
These trading links have built up over many years and are critical for farmers and processors on both sides of the border, it was stressed.
The president said it is positive that the UK has put forward the principle that they wish to avoid a border in either the UK or Ireland for any purpose, including customs or agri-food checks.
However, he noted, it is difficult to see how this could be achieved in practice, as cross-border trade in agricultural produce encompasses vital issues such as food safety and animal health.
“If the UK insists on pursuing its own free trade agreements, two divergent regimes would have to operate on the island and it is impossible to see how border checks could be avoided.
“The UK will have to compromise on its future trade ambitions with third countries in the area of agricultural and food products,” he added.
Healy said: “Ireland is the EU economy that will be the most impacted by a hard Brexit, and farming and agri-food will be the most impacted sector.
“Ireland’s agri-food sector has a high dependence on the UK market, with 40% of exports destined for the UK market annually.”
The president stressed: “The option of a ‘customs partnership’ between the EU and UK is simply not an acceptable outcome for the agriculture and food sector, as even under this arrangement, the UK would still be committed to pursuing its own trade policy for imports into the UK.”
Any increase in low-cost food imports into the UK that would undermine the value of the UK market would have a devastating effect on the Irish agri-food sector.
“The potential displacement of Irish food exports from the UK market will in turn destabilise the EU market balance.”
The president reiterated the terms needed in a balanced free-trade agreement that must be negotiated with the UK.
Turning to the outlook for dairy, Healy noted that, exactly a year ago, the first milk price increases after three years of cuts had just been announced.
“The mood of dairy farmers at the show last year altered instantly, as they really needed to see prices lift from the 23c/L doldrums of July 2016. They were only just starting to see the light at the end of the dairy crisis tunnel. Since then, milk prices have improved significantly, by an average of 10c/L.
However, dairy farmers are only just now able to catch up with the three years of cash flow difficulties which preceded the uplifts of the last 12 months.
“To be able to face fully their financial commitments, including merchant credit debt with their co-ops, they need the continuing market recovery fully passed back in further milk price increases,” Healy said.
“Between 35% and 40% of our milk supplies will be produced in the August-to-December period. Every possible price increase will make a significant difference to farmers’ financial position.
“With returns from average EU dairy commodity prices in mid-August equivalent to 35c/L plus VAT, there is ample scope for co-ops to increase their August milk price as a starting point,” the president concluded.