It has been another rollercoaster week on Brexit. A late-night serving of fish and (possibly) chips for UK prime minister Boris Johnson and European Commission president Ursula von der Leyen in Brussels last week failed to break the deadlock. The outcome? Another deadline before which progress would be required as last Sunday was set as D-day. There was no time wasted in dialling up tensions with talks of ratchet clauses and the deployment of gun boats. However, as Sunday drew to a close, waters calmed and the decision was taken to continue talking.

There has been a noticeable change in tone in recent days giving the sense that business is finally being done. As we go to press, hopes of a deal are building. But this is a negotiation process where the mood can quickly shift and gained ground can be quickly lost. Nevertheless, some are predicting another good Friday agreement.

UK prime minister Boris Johnson.

Throughout all this, the livelihood of farmers hangs in the balance. No other country is as exposed to the political brinkmanship as Ireland. In a no-deal scenario, the total tax levied on EU trade into Britain under WTO rules would be approximately €8.5bn per annum. In the case of Ireland, the figure will be in the region of €1.7bn. The extent to which our agri-food sector is exposed is best measured by the fact that the sector will carry almost 80% of the country’s total tax bill and almost 16% of all taxes levied across all sectors within the EU. If Irish agriculture was a country, it would have the second biggest tax bill after Germany in a no-deal Brexit.

The figures demonstrate why Brexit is such a big deal for Irish farmers and the Irish economy. But they also expose why many member states now see the issue as a distraction from what they view as the more important areas of climate change and economic recovery. Despite the media hype at the end of last week, we understand Brexit received little attention at the two-day in-person EU leaders’ summit – with discussion lasting a matter of minutes rather than hours.

Against this backdrop, one of the biggest challenges facing Ireland is to ensure member states understand that the “Irish problem” will quickly become an EU problem if not addressed. If the necessary mechanisms are not implemented to protect the value and volume of agri food exports into Britain from Ireland, then markets across the EU will quickly face major disruption.

UK beef deficit

As Phelim O’Neill reports, when the UK was an EU member state, the UK’s beef deficit meant that the EU as a whole produced the same amount of beef as it consumed. With the UK gone, the EU 27 now produces 16% more beef than it consumes. Unless this surplus continues to be channelled into the British market, the consequences on domestic beef prices within every EU member state will be severe. It is therefore in the interest of all member states to prevent any significant displacement of Irish beef from the British market. The risk of this happening applies whether or not a deal is reached in the coming days. Even in the event of a deal, the risk of Irish product being displaced remains – particularly in the case of beef. It will come in the form of increased competition from cheaper imports as the UK trades away access to its food market, currently valued at €70-€100m per day. The global competitiveness of our dairy, pigmeat and sheepmeat sectors will provide them with some protection.

\ Jim Cogan

Convincing member states that Ireland’s problem is their problem will be key to ensuring the necessary support mechanisms are put in place quickly to protect future trade between Ireland and Britain. Doing so is a key ambition of the Government. As we report this week, Minister McConalogue has doubled down on the commitment to protect farm incomes whatever the outcome of Brexit and to do what is necessary to ensure Irish product stays on British shelves. Meanwhile, Minister Coveney confirms that Ireland remains top of the queue in accessing the EU’s €5bn Brexit recovery fund. Fears were growing that the French were well advanced in the preparations to secure a significant proportion of the fund for their fishing sector.

The initial €400m package, which the Irish Farmers Journal understands is being developed currently, will provide farmers with a safety net. But money and supports can only be channelled into a market for so long. If wider, more controversial measures are to be implemented, such as rebalancing markets through the suspension of imports into the EU, political support across all member states will be important.

This will only be achieved if member states understand the impact that doing nothing will have on their domestic food markets.

EU: warm words do not distract from lack of figures

European Commission president Ursula von der Leyen.

European Commission president Ursula von der Leyen this week addressed the 2020 EU agricultural outlook conference. Once again, plenty of ambition was articulated when it came to the future demands on farmers under the EU Farm to Fork and Biodiversity strategies and warm words on the importance of farmer response to COVID-19. But it was notable that yet another EU leader took to the stage to present a future strategy for food production in the complete absence of any reference to its impact on farm incomes. This comes despite the Farm to Fork strategy acknowledging that “shifting to a sustainable food system would only be successful if it delivered a sustainable livelihood for farmers”.

It is not tenable for farm bodies across the EU to allow the Commission to continue to progress the Farm to Fork or Biodiversity strategies in the absence of a detailed economic impact assessment.

The current position is made less tenable by the fact that an economic assessment carried out by the US Department of Agriculture (USDA) has shown the Commission proposal would reduce the income of EU farmers by 16% while increasing the price of food to EU consumers by 17%.

The USDA figures show that due to the drop in productivity, if the model was adopted by the EU’s trade partners, food prices would increase by 60% with an extra 103 million people exposed to insecurity globally.

As the deprivation of technology to EU farmers continues, attempts should be made to clearly quantify the costs and for this to be reflected in the EU budget. Unfortunately, as Barry Cassidy reports, the Commissioner has no plans for an impact assessment of the strategy in advance and only talks of monitoring the results.

Dairy: outlook positive in spite of Brexit

There is a very real lift in sentiment across dairy markets. We have seen the New Zealand Global Dairy Trade auction rise for the last two months. This has translated into a strengthening of Fonterra’s farmgate price.

Closer to home, we have seen European processors lifting the base milk price for December by 1c/litre. In the home market, we have seen the introduction of November bonuses strengthen prices.

While some co-ops are understandably nervous of a no-deal Brexit given our retrospective milk pricing model, we can’t expect farmers not to receive what the market has already delivered. In the event of a trade deal, the market should be in a position to absorb the cost of non-tariff barriers while still remaining globally competitive.

International trade: TTIP back in focus

US president-elect Joe Biden has announced Katherine Tai to be US trade representative. Her Chinese-born parents moved to America in the 1960s to work as scientists. Her cultural understanding of Asia and scientific roots will no doubt influence her approach to trade.

Christmas editions: wishing you a happy and safe Christmas

Next week’s issue of the Irish Farmers Journal will be in shops one day early, on Wednesday 23 December, while the following edition will be on sale as normal on Thursday 31 December. For the latest farming news and expert analysis on the continuing Brexit negotiations, be sure to follow daily updates on farmersjournal.ie over the Christmas period.

I would like to take this opportunity to thank all our readers and customers for their support over the year. From all the team in the Irish Farmers Journal, we wish you and your family a happy and safe Christmas.