Tariff-free access to the EU market has been highlighted as a priority during Brexit negotiations for agri-food businesses in Northern Ireland, according to a report published by the Northern Ireland Food and Drink Association (NIFDA).

The report follows on from a series of meetings of NIFDA members in the wake of the Brexit vote and includes a survey of agri-food businesses that represent 84% of the sector’s turnover in Northern Ireland.

It states that the UK’s agri-food export turnover to the EU is around £26bn, however across sectors this equates to only 6% of total UK exports to the EU. NIFDA questions if this will be seen as significant enough to allow sufficient focus to secure an “optimal deal” for agri-food. Also, if the UK ends its £5bn contribution to the CAP budget, securing an agri-food trade deal with the EU could be “extremely challenging”, NIFDA have said.

“The executive and UK government should ensure agri-food industry is prioritised in trade deals recognising the low margin nature of the industry and its inability to compete through tariff walls,” the report states.

No deal

If a trade deal is not agreed and the UK trades with the EU under default Most-favoured-nation WTO rules, the report suggests that tariffs would see UK prices in the EU increase by 56% for beef carcase, 47% for butter and 58% for cheese. In the absence of a free trade deal for agri-food products, NIFDA states that “a transition plan” for phased introduction of tariffs should be used.

However, the report suggests that there is an opportunity for substituting EU imports of food into the UK with UK products if a trade deal is not struck. For example, the report states that the UK imports twice as much dairy produce by value than it exports and, in the beef and lamb sector, imports are over double the value of its exports.

Ireland is the largest market for Northern Ireland agri-food exports at around £700m and, similarly, the UK is the largest market for Irish agri-food exports, accounting for some €4bn

Irish border

There is an emphasis in the report for free movement of goods and people across the Irish border post-Brexit. “Ireland is the largest market for Northern Ireland agri-food exports at around £700m and, similarly, the UK is the largest market for Irish agri-food exports, accounting for some €4bn,” the report states.

Duties on imports of input products for Northern Ireland businesses are also raised in the report, with 67% of respondents stating that they were “very concerned” at the potential impact of tariffs on import costs. Of the respondents to the survey, 35% said that it would be “difficult to switch” from EU to UK based suppliers and 38% said that it would be “impossible to switch”.

Third countries

NIFDA are also calling for existing tariffs on countries outside the EU to be maintained in the UK post-Brexit. This is to ensure that the current cost of UK production is attached to third country imports through tariffs and does not allow the UK agri-food sector to be undercut by cheaper imports.

The report highlights the importance of the UK continuing existing EU trading arrangements with the 53 countries outside the EU. “This is particularly critical to milk powder plants in Northern Ireland whose primary business is to export into these markets,” the report states.

In most cases, WTO default rules would exclude the UK from agricultural markets in third countries. The report also highlights how third country markets are needed in the meat industry for “carcase imbalance” where cuts of meat that are not suited to domestic markets are sold into countries with different food preferences.

Labour and policy support

Access to foreign labour is a priority higher up the Brexit wish list for food businesses than with most primary producers. Respondents the survey, who employ over 95% of EU nationals in Northern Ireland, said that it would be “difficult” to replace EU nationals with local employees if access to foreign labour was reduced post-Brexit.

The NIFDA reports also recommends what post-Brexit UK agricultural policy should entail. High import tariffs, margin protection programmes (such as those in the US and Canada) and a rural development fund are the three broad elements of the recommended policy.

NIFDA states that the government should “improve the support for productive outcomes on farms using a balanced portfolio of policies delivering efficient output, environmental sustainability and rural society support.”

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