With a new prime minister and cabinet in place, the UK is now pondering how it will move into the implementation-of-Brexit phase. It is also becoming clear that there is no mood for a second referendum, despite an online petition gathering four million signatures, so we better get used to the idea that our main beef market and key market for dairy, sheep and pigmeat is likely to be radically altered soon after the UK leaves the EU.

Speculation continues around which type of model the UK will embrace to have a future trading relationship with the EU. The option of being part of the European Economic Area (EEA), the same as Norway, Iceland and Liechtenstein, is rejected because it demands free movement of people and requires a substantial financial contribution as well.

A Swiss-type model involving bilateral treaties to give effect to most EU legislation is a likely non-runner. The model talked about most recently is the Canadian free trade model, similar to what was negotiated between Canada and the EU.

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The only problem is that this does not include financial services, which account for over three quarters of the UK economy, but that could be negotiated.

What will be of most concern to Irish farmers is not the UK’s future relationship with the EU, but what trade deals they embark on independently after they leave. With financial services accounting for over three quarters of UK economic output and agriculture accounting for just 0.7%, plus the UK being a net importer of 40% of food, we suspect that agriculture will be a low priority in any UK trade discussions.

From a market perspective, Northern Irish farmers will be somewhat protected by being able to operate under the Red Tractor brand and we would expect that domestic UK production would continue to enjoy a premium in the marketplace. What would affect farmers south of the border are potential alternative imported supplies of beef, in particular.

Australia

Australia has been quick off the mark with Prime Minister Malcolm Turnbull suggesting at the weekend that the UK and Australia should work towards a free trade deal as quickly as possible. This would be worrying for Irish farmers as Australia is the second biggest beef exporter in the world, shipping 1.8m tonnes in 2015, more than three times Ireland’s total production, in 2015 (FAS/USDA). Its current main export destination is the US, which took 420,000t last year, followed by Japan with 283,000t, South Korea with 182,000t and China with 152,000t.

With a willingness between the UK and Australia to reach a trade deal as soon as possible after the UK leaves the EU, expect significant volumes of Australian beef in the UK market.

Australia would not be the worst possible competitor as its current farmgate price is reported the equivalent of €3.78/kg, just 6c/kg behind Ireland. This is an historic high for Australia, driven by an expected decline in the national kill this year of two million cattle, as this time last year the price was the equivalent of €3.07/kg.

New Zealand

Although more famous for its dairy and lamb exports, New Zealand (NZ) is the fifth biggest exporter in the world, shipping 590,000t of beef last year, again more than Ireland’s total production. Like Australia, the main market is the US, which took over 200,000t of this, while China, Japan and South Korea take over 100,000t between them (source: Beef and Lamb New Zealand).

The UK was historically NZ’s main lamb export destination, having had a preferential trade agreement specifically with the UK since the UK became part of the EEC in 1973. It has taken 52,000t in the year to June 2016; still very significant but well behind China which took 80,000t with the US taking 15,000t (source: Beef and Lamb New Zealand).

Following the vote, the NZ prime minister John Key said that they would seek a longer-term deal with the UK and it could well be that they join forces with Australia to negotiate this, as NZ already has a project team in place in London to begin work. On the thorny topic of migration, expect both NZ and Australia to raise the issue of travel access, something the UK previously rejected because of its EU obligations.

US

US president Barack Obama said ahead of the referendum that the UK would go to the back of the queue for trade deal negotiations if it left the EU. Given that the UK-US diplomatic and military relationship is one of the strongest in the world, we can expect that some efforts will be made to jump the queue. International Trade Secretary Liam Fox is travelling to the US to hasten the process.

While the Transatlantic Trade and Investment Partnership (TTIP) talks with the EU are ongoing, it is no secret that they are struggling. Without the UK in the EU, one of the more pro-agreement countries is lost and the chances of a deal diminish. If TTIP does not progress, expect the US and the UK to get involved in trade discussions with the UK, giving access for US beef a likely requirement.

Currently, the US is one of the world’s largest beef exporters, exporting just over 1m tonnes in 2015. This was primarily steak meat as the US market has a huge disproportionate demand for manufacturing or burger meat. This demand actually makes the US the world’s biggest importer importing just over 1m tonnes as well. This comes primarily from Australia, New Zealand, Canada and Mexico.

According to the US Meat Export Federation data, Mexico was the main destination for exports in 2015 taking 226,000t, followed by Japan on 205,000t, South Korea 126,000t, Canada 125,000t, Hong Kong 121,000t and the Middle East 116,000t.

Currently, US cattle prices are trading at the equivalent of €3.79/kg, similar to Australia but we would expect US steak meat to be relatively cheaper than ours in a future arrangement with the UK because of its disproportionate demand for manufacturing beef.

Canada

Given the close cultural links between the UK and Canada, plus the recent conclusion of a negotiation between Canada and the EU, we can expect that the UK will quickly engage with Canada for a trade deal once it has left the EU. From a beef and sheepmeat perspective, Canada is a large exporter (375,000t in 2015 making it the seventh largest exporter in the world). Like the US, it is also a large importer, taking in 280,000t in 2015. It is also striving to achieve carcase balance being an exporter of steak cuts while, in turn, importing primarily manufacturing beef. It is in this area like the US that Irish beef could face additional competition in the event of a trade deal between the EU and Canada.

Mercosur

This group of countries makes up a huge trade block and has the potential and desire to do a quick deal either collectively or individually in the case of Brazil and Argentina, in particular. They are already frustrated by the EU reluctance to include beef on the agenda, but such a problem would be unlikely to arise should the UK be negotiating alone.

This represents the single biggest threat to Irish farmers whose beef is primarily sold in Britain. Between Brazil, Argentina, Uruguay and Paraguay, they exported 2.6m t of beef in 2015 (source: FAS/USDA) and the high-value UK market would be welcome. The UK was at the forefront in the EU pushing a deal with Mercosur and trading beef for financial services is unlikely to be a big issue if the UK is negotiating for itself alone.

A deal with this group represents the single biggest threat to Irish beef producers in a post-Brexit situation with the UK making independent trade deals. Not only are they huge volume exporters, these countries have cheap and plenty of good beef cattle. Argentina was historically a large supplier of beef, particularly before World War II, and with its recently elected free trade-minded government, it has the potential to become so again.

Above all, the threat to Ireland being displaced in the UK beef market is greatest by the price of the UK cattle – currently, the equivalent of €2.60 for R3-type cattle, with this figure hovering just above €2/kg in the early part of this year.

Other countries

As well as those outlined above, other countries are thought to include India, China, Japan, South Korea, Singapore and Hong Kong. They represent little threat to Irish farmers because none are recognised as major exporters of agri-food products.

There is a clear threat to Irish agriculture and beef producers in particular. This is not so much in relation to the arrangement the UK reaches with its former EU partners, but the trade deals it chooses to pursue afterwards. All major agri-food exporters represent a threat to Ireland but beef is particularly exposed given the extent of our reliance on the UK.

The US, Australia and NZ are likely early deals and present a threat due to the high value of the UK steak meat and roast market, even though their cattle prices currently are not that much behind Ireland.

However, it is the big Mercosur countries of Brazil, Argentina, Paraguay and Uruguay that represent an even greater threat. They have the same market ambitions but work off a cattle price of around €2.50/kg at present. This has the potential to decimate the Irish industry. Northern Ireland will have some protection from the Red Tractor branding, although the form and size of direct farm payment will be a concern.