Over the past week, the time until Brexit takes effect has become less than the time that has passed since the vote took place. At 11pm on Tuesday night this week, the point was reached when 500 days were left until the UK leaves the EU, and at that point 510 days had passed since the referendum on 23 June 2016 when the UK voted by a 52%:48% to leave.

Despite there being less than 500 days left, little substantial progress has been made in discussions between the EU and UK on how business will be done between the two trading blocs after 11pm on 29 March 2019 when the UK will formally leave the EU.

So far, discussions have yielded little progress. They got off to a slow start following the triggering of Article 50 at the end of March by the UK prime minister, Theresa May. Almost immediately after this event, she called a surprise general election. With a huge opinion poll lead, a large Government majority was expected, but a long six-week campaign had the opposite effect with the prime minister coming back without a majority in Parliament.

It was 19 June before formal negotiations began between the EU and UK and since then six rounds have been completed. So far, discussions have been concentrated on what the UK has to do to close the relationship with the EU before negotiations on a future trading relationship begin. It is now hoped that sufficient progress will have been made to allow discussions move on to the next phase after the December meeting of EU heads of state. The EU lead negotiator Michel Barnier wants negotiations wrapped up by October 2018, so that there is sufficient time for the EU institutions to debate and vote on whatever deal is presented at that point.

Much has been written on the exposure of Irish agriculture to the market in Britain, particularly for beef and cheese in the event of what has been described as a hard Brexit. While Brexit is still almost 500 days away, the effect was felt on the Irish beef trade immediately after the result of the referendum becoming known on the morning 24 June 2016. Cattle prices fell immediately and within a month of the vote, an R3 steer had fallen 20c/kg (excluding vat), costing farmers between €75 and €100 per head on a typical factory bullock. While the market subsequently stabilised, as the date becomes closer, uncertainty increases. For farmers in Northern Ireland, the vote had a very positive effect on prices. This was caused by the weakening of sterling making Northern Ireland exports more competitive. Similarly, the BPS payment was boosted over the past two years with the euro moving to £1.12 from £1.37.

Biggest threat

The greatest threat comes from a situation where no trading arrangement is agreed in negotiations. This means that trade will have to be conducted on World Trading Organisation (WTO) rules. These provide for particularly draconian tariffs on beef and cheese, the two big agricultural exports from Ireland to Britain, and for some cuts of beef their cost could be doubled.

Alternatively, if it is trading under WTO rules, the UK has the option to set its tariff levels at whatever level it decides.

While a low tariff would be preferable to Ireland, the reality is that this becomes available to any WTO country. This would effectively open up the UK market to Mercosur imports and displace Irish beef. For the Irish dairy industry, the investment in cheese-producing facilities means that any switching of milk use would be extremely costly and the alternative powder product doesn’t attract the same return as cheese.