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Free-trade deal still means borders
A free-trade deal between the EU and UK would allow trade but would still mean borders and all that goes with them.

While another round of negotiations between officials took place in Brussels this week, the political talk in the UK is increasingly talking about a no-deal Brexit.

New UK Foreign Secretary Jeremy Hunt, who has replaced Boris Johnson, has been on a tour of northern EU countries where his assessment and that of his hosts in most cases is putting the chances of a deal at 50:50.

Customs union and single market best for Ireland

While Irish farmers continue to hope that the UK remains in a customs union and ideally the single market after Brexit, it is becoming increasingly likely that this will not happen.

Anything that moves from this makes trade more difficult with the worst-case scenario being the no-deal situation which means defaulting to WTO rules and the prohibitive tariffs on agricultural exports from Ireland to Britain and across the Irish border.

Free-trade agreement

If a free-trade agreement (FTA) is concluded, and the expectation is that it would be at zero tariffs on all goods, that would allow Irish exports to the UK trade to continue on a cross-border basis.

However, an FTA, even if it is like Canada, still means borders and inspections on third country rules. This means a check on paperwork and random physical checks, all carried out on a risk-based assessment.

For example, a one-off export/import from a non EU member will receive more scrutiny than a company that has a regular trading relationship.

Future relationship

If the future UK-EU trading relationship is based on an FTA, it would enable business continue uninterrupted in the short term, subject of course to custom inspections.

However, in the longer term a simple FTA with the UK with no further commitment would mean that the UK would be free to negotiate its own trade deals, with all that means potentially for Irish farmers. Essentially, if the UK has an FTA with the EU, it can also negotiate whatever FTAs it wants with the rest of the world.

Inevitably, that would mean that potential deals with South American countries, Australia and New Zealand, would mean a huge influx of zero tariff agricultural produce to the UK, displacing Irish in the process.

Hard borders

Strictly speaking, an FTA would mean scrutiny on the Irish border despite both the EU and UK committing to no physical border.

The EU and UK have a backstop agreement that would allow Northern Ireland maintain access to the EU but this is politically difficult. How this is resolved will have an impact on cross-border trade, which could continue as it is if the backstop is adopted in the event of a wider FTA between the UK and EU.

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Beef prices weak across the EU
With drought conditions in Britain and the continent, cattle prices have suffered similar to Ireland

Irish cattle prices have taken a battering over recent weeks as drought conditions forced farmers to kill cattle at a faster rate than they might have otherwise. Kills have been at 35,000 or higher over the past few weeks compared to 30-32,000 in the same weeks in 2017.

Steers and young bulls

Irish R3 steer prices were reported at €3.82/kg last week which is 28c/kg behind Britain but only marginally behind Spain and Italy. In Spain R3 young bulls were making €3.83/kg while in Italy R3 young bulls were making €3.84/kg. Elsewhere in Ireland’s main Eurozone beef export markets, Irish R3 steer prices were stronger than R3 young bull prices. In France, the average R3 young bull made €3.72/kg and in Germany, the average R3 young bull price was €3.70/kg. Overall EU average young bull price was €3.71/kg.

Heifers

The gap between R3 heifer prices in Ireland and Britain was closer at 16c/kg, but Italy was the dominant heifer market, returning €4.24/kg average for R3 heifers. French R3 heifers were almost on par with Ireland at €3.93/kg compared with €3.94/kg in Ireland, but elsewhere in the Eurozone prices were lower. German R3 heifers were making €3.71/kg while in Spain the R3 heifer price was the same as young bulls at €3.83/kg, just below the EU average EU R3 heifer price which was €3.84/kg.

Cows

Cow slaughterings have made news in recent weeks as drought conditions took hold. This was the case across the EU with the UK showing a big drop in prices over the past couple of weeks. The French cow market which is always strong though behind Ireland for much of this year, has stood up well and O3 cows were making €3.31/kg during the last week of July.

Despite the falls, Irish prices are the best of the rest returning €2.99/kg on O3-grading cows. This is followed by Germany where O3 cows are making €2.95/kg which is just 1c/kg ahead of Britain and the EU average which is €3.94/kg on O3 cows.

Rest of the world

South America continues in the doldrums with Brazilian R3 steer equivalents making just €1.98/kg when converted to Euro. In the USA, steers equivalent to R3 are making €3.38/kg and in Australia the same animal is making the equivalent of €3.05/kg.