December 28, 2018
Ireland's meat sector faces "catastrophic" impact from 'no-deal' Brexit
The UK is not only the nation worried over the fallout of a 'no-deal' Brexit - meat processors in neighbouring Ireland had raised the alarm of damaging consequences for their industry should London fails to resolve the impasse over a post-EU agreement, Irish Independent reported.
A "hard Brexit" would not only translate to hefty tariffs on trade with the UK, but also result in higher transport costs, border delays, disrupted supplies and other unforeseen challenges arising from a break from EU regulations. These factors would severely impact Ireland's meat sector, Meat Industry Ireland (MII) warned in a document, describing a 'no-deal' outcome as "catastrophic for Irish agriculture and our food export business."
In a de facto manner, the UK's divorce from the EU would exclude Ireland from its market in the event of a 'hard' Brexit. This development could spark an immediate crisis, MII said.
"The impact on EU markets will be immediate, with surplus product being exported onto already well-supplied markets resulting in a price collapse," the organisation explained.
The drop in producer prices would also be unavoidable due to loss of the UK market share. Without any alternatives for a viable market, the Irish meat sector risks further losses in the form of diminishing returns, MII added.
"In an oversupplied market of the scale envisaged, processing companies will quickly examine and respond to the new market circumstances while taking steps to bring operational capability into line with new market realities. With a sudden and significant reduction in access to the UK market, plant closures or restricted operations should be anticipated," it added.
Another concern is that the UK could seal trade deals with other international suppliers, thus undermining Ireland's position as a dominant player in the UK market.
There is simply no escape from the drastic impact of Brexit and the cost of exporting Irish meat to the UK would only increase after March next year when the UK officially leaves the EU. Trade costs imposed by tariffs, customs and veterinary inspections - coupled with the rise in transport costs - would reduce meat exports from the EU to the UK by close to 84% for beef, 48% for pork and 76% for sheep meat, according to MII, referring to recent research.
Furthermore, a glut in beef and pork supplies (due to reduced trade) would induce a loss in the value of EU meat production, which would amount to EUR2.4 billion (US$2.7 billion) per annum for beef in the short term and over EUR2.3 billion (US$2.6 billion) for pork.
The appropriate response to the looming post-Brexit crisis would be EU measures that are urgently needed to stabilise the EU market over the medium term, MII said.
"In the potential crisis that is likely to result from a 'hard' Brexit, such measures could put a floor on prices until wider stabilising measures can be agreed, acting to mitigate the worst immediate effects and act as a bridge until some semblance of order returns to the commercial market," the organisation said.
One sector that would be very much affected is Ireland's pig industry. After March 2019, the imposition of WTO tariffs could immediately suspend the export of live pigs from Ireland to Northern Ireland. This sudden impact on supply could escalate into a processing capacity problem that may even led to concerns over animal welfare at some Irish pig units, MII warned.
Exports of these animals to Ireland's immediate neighbour amounts to around 500,000 live pigs annually.
Meanwhile, a survey of member discovered that the Irish meat sector sends in 320 refrigerated trucks of meat weekly to continental EU markets from Sweden in the north to Italy in the south. "Approximately, 11% of these trucks are shipped directly from Ireland to an EU port. The clear majority, 89%, of consignments use the UK transit Land-bridge," MII said.
It pointed to future loss of the Land-bridge which would have "enormous risks, distinct and separate from the fact that alternative routes would take time to be properly developed and involve significant infrastructural adjustments."
This challenge would add to culminated costs already incurred after Brexit due to "longer journey times to market, reduced shelf-life, increased stock carrying requirements and serious disruption to a just-in-time fresh food delivery system that has evolved over the years and which is crucial to holding onto customers," MII said.
- Irish Independent