Irish beef exports to Britain have been largely unaffected to-date by Brexit, but this situation could be set for a profound change.
The UK government’s drive to agree trade deals in Australasia, North America and Latin America poses a real threat to Ireland’s position as the dominant supplier of beef to Britain.
Indeed, it raises the spectre of Irish processors having to compete with cheap beef imports from Australia and the Americas on the British market.
This represents a ‘back-to-the-future’ scenario for Ireland as the battles for dominance on the British beef scene were originally fought in the 1960s, when the Irish beef industry was in its infancy.
Although Ireland continues to supply close to two-thirds of the 300,000t of the beef Britain imports each year, recent trade deals with Australia and New Zealand – and the possibility of further agreements with Canada, Mexico and Uruguay – will inevitably crank up competition in the market.
This is the first time that Irish meat processors have faced this level of competition in the British market since the late 1960s.
Indeed, the development of the country’s beef processing sector from the early 1950s was predicated on Irish meat factories securing volume sales in Britain – and to a lesser extent, the US.
However, building market share in Britain meant going head-to-head with Argentine and Australian imports.
Argentina was the leading supplier of beef to Britain by the early 20th century, and this trade was a reflection of close economic links between the two countries. Indeed, British investment in the Argentine rail network and meat processing industry saw total exports of beef from the pampas reach 400,000t by 1916.
Much of Argentina’s meat was processed by British-owned meat packing operations, with beef barons such as the Vestey family establishing huge operations in the South American state. Argentina was the dominant player in the global beef business up to the Second World War, accounting for more than half the traded product during the 1920s and 1930s.
The UK also remained the largest importer of beef during this period, with the country’s requirements totalling 600,000t in 1938, despite the increased protectionism of the inter-war years.
Australia and Argentina were still the primary suppliers of beef to Britain when international trade recovered after the Second World War.
And although Britain’s import requirements fell to around 350,000t by 1960 (as the UK significantly increased domestic output), close to 60pc of this volume was supplied by Argentina.
At this time, Ireland’s carcase beef industry was just a decade old. Up to the late 1940s, Ireland’s cattle industry was dominated by the export of live animals.
This was reflected in the country’s trade figures. While between 500,000 and 650,000 live animals were shipped abroad each year, just 6,000t of carcase beef was exported in the late 1940s. There was also a successful canned meat sector, but this primarily took cows.
Opening of exports
The opening of exports to the US and Britain in the early 1950s – along with contracts to supply the US armed forces based in Europe – enabled Ireland’s beef exports to grow exponentially during the 1950s.
In fact, by the early 1960s, Ireland was exporting close to 60,000t of beef – 10 times more than it had done a decade earlier.
However, the scale of the Irish industry was still dwarfed by that of Argentina, which exported close to 530,000t in 1963.
Ireland’s position in the British market was similarly towered over by the South Americans. Britain imported 235,000t of chilled and frozen beef from Argentina in 1963, compared to just 36,000t from Ireland.
But Ireland had a number of crucial advantages over its South American competitors.
The most important of these was that the country was free of foot-and-mouth disease – a distinction shared only by Iceland in 1950s and 1960s Europe.
Increased government support was also a decisive factor in the expansion of beef exports during the 1960s. This was particularly the case following Charlie Haughey’s appointment as Minister for Agriculture in the autumn of 1964.
Haughey pushed the case for the beef processing sector during negotiations for the Anglo-Irish Free Trade Agreement (AIFTA) of 1966, until the UK government agreed to extend export supports to carcase beef. These UK exchequer supports, or deficiency payments, were traditionally restricted to live cattle exports.
Under the trade agreement, 25,000t of prime Irish beef qualified for the supports. This was equivalent to paying export subsidies on around 100,000 cattle.
Haughey doubled down on the UK supports by offering Irish exchequer subsidies at the same rate as the British deficiency payments on all prime beef exports to Britain in excess of the 25,000t covered by the AIFTA.
This represented a windfall for the beef processors, with close to £8m paid to the factories under the subsidy schemes between 1966 and 1970.
Beef exports almost trebled in the years following the AIFTA as a consequence of increased supports, rising from 56,000t in 1965 to over 150,000t two years later.
The growth in beef exports – specifically to Britain – was even more pronounced, increasing four-fold to almost 110,000t between 1965 and 1967.
The challenges for Argentina posed by increased competition from Irish beef were compounded by an outbreak of foot-and-mouth disease in Britain from 1967 to 1968.
A consignment of carcase beef from Argentina was blamed for the outbreak, and all imports from South America were subsequently banned for six months by the British authorities.
Argentine beef exports collapsed as a result of the ban, falling from over 110,000t in 1967 to under 35,000t in 1968.
By 1971, Ireland supplied 42% of British beef imports and had taken over Argentina’s position as the UK’s primary beef supplier.
EEC membership in 1973 closed off any hopes of an Argentine recovery in the British market, as access for South American beef was restricted by external tariffs.
However, Brexit has effectively turned the clock back 60 years by fundamentally changing the landscape for beef imports into Britain.
Ireland may have exported close to 200,000t of beef to the UK last year, with this business worth €1.1bn, but this trade is now up for grabs again.
And as in the 1960s, it is being hunted by processors from Melbourne to Manitoba – and all points in between.