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Since the Brexit referendum, there have been repeated reassurances from the Government and the EU that the unique Brexit challenges facing Ireland are fully understood.
However, while time will reveal how they deal with the wider issues, so far they have failed the first test: dealing with currency fluctuation.
Sterling has devalued against the euro by 25% since the end of 2015 as the result of a once-in-a-lifetime event: the UK leaving the EU. Major corporations where a tiny movement in currency can have a dramatic impact have systems to manage the volatility. However, a farmer calving a cow in autumn 2015 when a euro was worth 70p now faces a market where that animal – in which he has invested time and money – is worth 25% less in its most likely market.
This applies to any enterprise doing business with the UK. Nevertheless, despite the fine words over the past 16 months, neither the Government nor Brussels has been prepared to look at measures that would reduce exposure.
Historically, the EU could address the impact of currency fluctuations in trade between members with monetary compensatory amounts (MCAs). As with intervention-buying of commodities and export refunds, MCAs are now part of EU history. However, they served a purpose and while it may be desirable that these mechanisms remain a part of history, they could and should be used to deal with these unique times.
Speaking at Iverk Show on Saturday, An Taoiseach Leo Varadkar appeared to dismiss the Government’s role in dealing with currency volatility.
He rightly pointed out that it is something we have dealt with in the past, highlighting the collapse in sterling in 2009.
However, while understandably still getting fully up to speed on his demanding brief, it should be highlighted to the Taoiseach that the sterling collapse in 2009 saw 20% wiped off Irish cattle prices.
Just because farmers have carried the costs before does not mean we should stand back and allow a repeat performance.
There is a need for Government to become much more vocal on this issue in Brussels.
It has invested a lot of political capital within the EU in ensuring that issues relating to Northern Ireland were recognised within Brexit discussions.
The same effort needs to go into getting a strong commitment to protect vulnerable sectors of the Irish economy – such as farming.
There should be the opportunity to form strong political alliances with other member states.
After all, there are consequences for EU prices if Ireland is forced to divert increased volumes of beef on to the EU market or if a sterling/euro parity scenario allows the UK to flood the French market with cheap lamb.
Ireland needs to highlight the precedent already established by the EU when aid packages were provided to member states in the wake of the Russian ban on EU imports.
European Commissioner for Agriculture Phil Hogan has in the past ruled out such measures being available to Ireland on the basis that it is not the Commission’s role to react to currency volatility.
But this is much more than normal currency volatility – this is a once-in-a-lifetime realignment reflecting the momentous decision of the UK to leave the EU.
The Commission’s position needs to be challenged much more robustly than it has been to date. As the fractious Brexit negotiations proceed between the UK and EU, these shocks are only going to keep coming and there is a real risk that the fallout could lead to a structural shift in the euro/sterling relationship.
In such an environment, neither the Government nor Brussels can continue to hide behind fine words saying that they understand – they must show that they are prepared to take action.
If measures available in the past at EU level are no longer available, then let alternatives be put forward that can protect exposed sectors.
Here, the Government’s understanding of the Brexit challenges will be evident based on the measures introduced to protect vulnerable sectors in the budget.
While the Taoiseach’s commitment to focus on increasing our global presence should be welcomed, achieving this should not be under estimated. Despite huge investment by Government, our beef industry has struggled to gain a foothold in the US market for Irish beef.
Our industry is still dependent on our closest neighbour and we need a Government and EU policy that addresses the reality of doing business in that market.
In reshaping Ireland’s focus, Government must recognise what is required to support the primary producer.
Increasing budgets for State agencies alone with not solve the problem.
They are welcome, but only a secondary measure that should come with clear and measurable targets that will yield a dividend for farmers.
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