The announcement by UK Chancellor (finance minister) Rishi Sunak of a half-price eating out deal and a cut on VAT in the hotel and hospitality sectors is designed to turbo-charge the reopening of the hospitality sector in the UK.

Pubs and restaurants began reopening in England, which is the main market for exports of Irish agricultural produce last weekend.

The subsidised eating out campaign will be available from Monday to Wednesday during August, while VAT on tourism and hospitality will be reduced from 20% to 5% from 15 July and will last six months.

It is also designed to encourage people to opt for a holiday at home in the UK

The purpose of this initiative is to help the hospitality and hotel businesses to recover from the lockdown imposed in March, which particularly hit this sector.

As it coincides with peak holiday season, it is also designed to encourage people to opt for a holiday at home in the UK.

As well as contributing to minimise the risk of bringing coronavirus in from abroad, it would also provide a badly needed boost for the struggling tourist and hospitality sectors.

Why it matters to Irish farmers

The impact on Irish farmers won’t have been on the minds of the scheme's designers, but they stand to gain significantly from the initiative.

The English restaurant and fast food sector is the main high-value outlet for Irish beef as opposed to supermarkets.

Mc Donald's uses British and Irish beef in its UK outlets.

Both McDonald’s and Burger King promote their burgers as being made with either British or Irish beef.

This category, along with premium gourmet burger outlets, will be huge winners from the government scheme, as the 50% subsidy is limited to £10 per person.

When the VAT reduction from 20% to 5% is also included, prices in fast food outlets will be dramatically cheaper.

Irish beef is the alternative premium beef choice for this sector

Any initiatives driving both standard and premium burgers is good news for forequarter beef sales from which burgers are made.

Steak-based and carvery-type meals use the hindquarter cuts of beef and a £10 discount plus a further 15% VAT saving will encourage customers in this sector as well.

With the UK supermarkets focusing on using British beef, Irish beef is the alternative premium beef choice for this sector, although there is competition from South American origin steak.

Not just beef

The Irish dairy sector will also see increased demand from the UK for butter and cheese, both major ingredients in the UK hospitality sector.

The sandwich sector and pizza outlets are major users of cheese and Ireland is long established as the UK’s number one supplier of imported cheddar.

Similarly, the UK is Ireland’s number one export market for poultry. Chicken-based standard and premium fast food outlets (KFC and Nandos) will benefit from the scheme.

Pigmeat products are more associated with breakfast meals and, again, the reduced VAT and holidaying at home initiative should drive demand for hotel breakfasts as well.

Kebabs were the big winners of the home delivery market during lockdown and they are likely to remain in demand as pubs reopen.

Any downside?

If this initiative succeeds in persuading UK consumers to holiday in the UK and resume out of home eating, it will reignite the restaurant and hospitality sectors in August and government will be hoping that is sustained through the autumn by the reduced VAT rate.

The only problem is that if there is a surge in out-of-home eating and a restoration of pre-lockdown trends, a fall in retail sales is inevitable.

However, in the UK, this market is dominated by British-produced goods and a robust catering and hospitality sector arguably serves Irish farmers better than retail.

Irish beef, more than any other sector, depends on the UK market and this UK government initiative should drive demand for the next six weeks and to a lesser extent through the autumn with the reduced VAT as well.

Read more

Beef prices rising as demand outstrips supply

Irish milk prices set to jump for June

Sheep prices: Vibrant trade as kill tops 60,000 again