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The negative tone coming out of the European Council meeting in Brussels this week suggests the prospect of a no-deal Brexit is becoming more likely. Sterling has weakened from 87p/€1 to 88.5p/€1 over the past couple of weeks, a good barometer of sentiment. Also, the term ‘‘preparing for no deal’’ has crept into almost very interview about the issue over the past week.
If the worst happens, trade with Britain and the north would be subject to World Trade Organisation (WTO) tariffs. These are particularly high on agricultural products and are calculated as a rate per kilo or a rate per kilo plus a percentage of the value of the product.
Beef price doubles
The tariff on boneless beef is calculated by adding 12.8% of the value of the product to €3.03/kg. This means that a lower-value beef product such as 80vl trims that would be used in the manufacture of mince or burgers, and currently selling in the UK wholesale trade at €3.70/kg, would cost €7.20/kg when the WTO tariff is added. This almost doubles the cost of one of the biggest selling categories of Irish beef in the UK market.
Impact on cattle
If a 550kg steer worth €1,100 was being sold from a mart in the west to a buyer from the north, under WTO tariffs it would carry a tariff of 10.8% of its value (€112.20) plus €93.10 per 100kg (€512). This means the animal that would have cost the Northern Ireland buyer €1,100 would now cost €1,724 when the €624 of tariff is added on. Assuming the animal is still worth just €1,100 in Northern Ireland, the farmer selling the animal would have to carry the €624 tariff cost, meaning that he would have to accept just €476 which is simply unrealistic.
North-south trade
It would be the same for farmers selling lambs or milk from Northern Ireland to buyers from the south. Live lambs carry a tariff of €80.50 per 100kg, which means that a 42kg lamb leaving a mart in the north would be €33.81 more expensive by the time it arrives in a factory in the south on top of the current value of around €105 per lamb. Milk which currently comes across the border at a value of around 31c/l would carry a tariff of 21c/l making its cost under WTO terms 52c/l.
Meanwhile, pigs going north for processing would carry a tariff of €41.20/100kg and with pigs currently worth around €1.40/kg, paying this tariff would leave just 98c/kg for the farmer.
Grain
Like each of the other commodities, grain too would carry a penal tariff. For example, a tonne of imported wheat worth approximately €199/t would increase to €294/t when a €95/t WTO tariff is added.
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