Net margins for Irish wheat and barley could see slight increases in the event of a no-deal Brexit, according to an analysis carried out by Teagasc. Speaking at Wednesday’s National Tillage Conference in Kilkenny, Fiona Thorne presented data which looked at the effect a no-deal Brexit would have on the tillage sector.
Using data from the National Farm Survey and FAPRI, the analysis compared the effect of two Brexit trading scenarios on farm incomes by 2026. The first scenario was carried out using the current ‘baseline’ trading scenarios while the second was looking at trading terms under a ‘no-deal’ scenario.
In the event of a no-deal Brexit, the UK would trade under WTO terms, with significant tariffs imposed on UK cereal imports. Wheat imports would see a tariff of €95/t, barley €93/t while oats would see a tariff of €89/t.
As Ireland are net cereal importers, the UK market would essentially be closed to Irish merchants.
This could potentially lead to an increase in the value of indigenous grain and an increase in wheat and barley margins, Thorne stated.
For example, a hard Brexit could equate to an increase in net margin from €443/ha to €514/ha for wheat due in part due to the closing of UK as a source of cereal imports.
Decrease in farm incomes
However, average specialist tillage incomes are projected to decrease to €38,198 from €39,443 in a no-deal scenario, largely due to the prevalence of beef and sheep enterprises on specialist tillage farms. Some 20% of income on specialist tillage farms come from beef enterprises, Thorne stated.
Unknowns
Thorne was clear to state that there are many unknowns in this analysis. For example, the extent to which significant exchange rate movement will effect imports is unknown. So too is the effect of changes on other outputs such as straw receipts. CAP uncertainly will also likely impact on tillage farm incomes.
The Irish cereal sector is also largely reliant on the performance of other sectors, such as pig and poultry.
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Net margins for Irish wheat and barley could see slight increases in the event of a no-deal Brexit, according to an analysis carried out by Teagasc. Speaking at Wednesday’s National Tillage Conference in Kilkenny, Fiona Thorne presented data which looked at the effect a no-deal Brexit would have on the tillage sector.
Using data from the National Farm Survey and FAPRI, the analysis compared the effect of two Brexit trading scenarios on farm incomes by 2026. The first scenario was carried out using the current ‘baseline’ trading scenarios while the second was looking at trading terms under a ‘no-deal’ scenario.
In the event of a no-deal Brexit, the UK would trade under WTO terms, with significant tariffs imposed on UK cereal imports. Wheat imports would see a tariff of €95/t, barley €93/t while oats would see a tariff of €89/t.
As Ireland are net cereal importers, the UK market would essentially be closed to Irish merchants.
This could potentially lead to an increase in the value of indigenous grain and an increase in wheat and barley margins, Thorne stated.
For example, a hard Brexit could equate to an increase in net margin from €443/ha to €514/ha for wheat due in part due to the closing of UK as a source of cereal imports.
Decrease in farm incomes
However, average specialist tillage incomes are projected to decrease to €38,198 from €39,443 in a no-deal scenario, largely due to the prevalence of beef and sheep enterprises on specialist tillage farms. Some 20% of income on specialist tillage farms come from beef enterprises, Thorne stated.
Unknowns
Thorne was clear to state that there are many unknowns in this analysis. For example, the extent to which significant exchange rate movement will effect imports is unknown. So too is the effect of changes on other outputs such as straw receipts. CAP uncertainly will also likely impact on tillage farm incomes.
The Irish cereal sector is also largely reliant on the performance of other sectors, such as pig and poultry.
Read more
Dairygold announces bean price of €210/t
Watch: grading 10t/hr of potato seed in Scotland
Grain trends: no market drivers to show change
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