Bleak outlook for agriculture

Ulster Unionist MEP Jim Nicholson put it very succinctly when he said that the Irish border automatically becomes the formal frontier between the UK and the European Union the instant that Brexit becomes a reality, writes Richard Halleron.

Superimpose on this reality the fact that Ireland’s food sectors are becoming more ‘all-island’ in nature and it’s hard not to conclude that the EU referendum result in the UK will have major repercussions for food companies and farmers on both sides of the Irish border.

Consider the facts: half a million lambs are exported from Northern Ireland annually for processing in the Republic of Ireland. Around 100,000 store cattle are imported from the west of Ireland for finishing in the north, again on an annual basis. Where pigs are concerned, the trends have changed somewhat over the past couple of years. Direct access to the Chinese market has meant that the vast bulk of the pigs produced in the Republic are slaughtered and processed within that jurisdiction. Prior to this almost 75 per cent of the pigs produced on this island were slaughtered in Northern Ireland but there is a likelihood this trend could be re-established given that China may well give the green light to direct imports of fresh pork from Northern Ireland in the very near future.

It is the milk industry that stands to be challenged most directly by the Brexit vote. Approximately 75 per cent of the processing capacity in the north is now wholly or jointly owned by southern co-ops and this figure would increase to almost 100 per cent if United Dairy Farmers were ever to do a deal with the likes of Glanbia of Dairy Gold.

As a consequence of this, more than significant volumes of raw milk cross the border in both directions every day. This trend reflects the trading arrangements and the producer supply pools which each of the dairies has established but it also reflects the practical realities of running a dairy processing operation on this island. Unpasteurised milk is a very unstable product, even if kept under the most stringent refrigerated conditions.

So, for sake of argument, let’s say that United Dairy Farmers’ cheese plant at Dunmanbridge in Co Tyrone has a breakdown. At the present time the milk destined for that facility would be re-directed to Lakeland’s plant at Bailieborough in Co Cavan or another nearby processing operation and, of course, the same process can happen in reverse in the event of a breakdown at a plant south of the border. This is part of a gentleman’s agreement which all the processers have with one another and it all makes perfect common sense.

Currently, milk can be moved freely from one jurisdiction to the other but looking ahead, the question is what happens to these practises once the UK officially leaves the EU? Will these cross border movements of milk be officially regarded as import/export transactions, in an official sense? And, if this is the case, what are the logistical and tariff implications for processers?

None of these questions were answered fully by the pro leave camp in the debates held prior to the EU referendum vote. The likes of Theresa Villiers, Northern Ireland’s Secretary of State, kept telling the world that the border would not become an issue post a Brexit. She, and others, predicted that an EU of 27 would, almost certainly, agree to a free trade agreement in the event of the UK leaving the European Union and even if this didn’t happen, the cross border movement of goods and services could be monitored electronically, thereby ruling out the need for border posts.

In my opinion, all of this is absolute nonsense. In the first instance the likes of France and Germany will never agree to a free trade deal with Britain and this cold reality will have major implications for food operations and farmers on both sides of the border. The imposition of tariffs, never mind the logistical problems of shifting livestock, grain and food products from one side of the border to the other, will have major financial implications for this island’s food sector and the bad news for farmers is that, invariably, they will end up paying the bill for all the costs incurred.