After one of the most positive trade missions ever for the Irish beef industry to China the previous week, this week has been just bad news followed by more bad news. Despite prices being on an upward curve and now among the best in the EU across all categories, storm clouds are gathering.

Mercosur

Perhaps the most worrying of all is the suggestion that a trade deal with the Mercosur countries of South America looks like it is back on and farm organisations across the EU have declared a red alert. Copa, the EU umbrella organisation of which the IFA is a member, has written to European Trade Commissioner Cecelia Malmstrom robustly declaring their opposition to further access for sensitive products to the EU market.

It appears that the EU has wrung concession from Mercosur negotiators on access for cars and car parts, the main hurdle that blocked a deal in the margins of the WTO summit in Buenos Aires back in December. The next round of negotiations is scheduled to commence on 4 June in Uruguay and with only dairy access and GIs left to be finalised from the EU side, the pressure will be on beef access to the EU to closed the deal.

The problem of access for beef to the EU market is that it is at best a stable market and it has been opened to Canada and Mexico recently and with trade discussions about to start with Australia and New Zealand further opening of the market is likely.

Brexit cloud

All of the issues associated with trade deals are multiplied when the potential Brexit impact is factored in. With negotiations at stalemate in Brussels and the UK government still wrestling with what its bottom line is, the possibility of a catastrophic Brexit is growing. This week, the Central Band published a Brexit impact analysis report which considered the impact of non-tariff barriers which in themselves are sufficient to wipe out Irish agri-food trade with the UK.

The report shows that non-tariff barriers, which are predominantly administrative procedures around customs and standards, would hit Irish trade with the UK, reducing it by 9.6%. Within that overall figure, dry goods and things like fuels and chemicals wouldn’t really be affected at all but fresh produce, particularly food would carry most of the hit.

Farm income survey

While all of this is ongoing, Teagasc shone a torch on the income situation with their publication this week of the performance data for every sector. The only category which was showing an acceptable income is dairying, with everything else shown to be a marginal business that wouldn’t exist without the CAP payments. The trade mission to China and the demand it revealed for beef briefly created the idea that beef prices could be sustained at a higher level. However, trade deals that allow continued greater access to the EU market and a declining CAP budget will quickly shatter any fragile confidence that was building.