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As the risk of no deal between the EU and UK increases, it is necessary to focus on what impact tariffs published by the UK government would have on Irish farmers. The tariff cost on the main products we export to Britain would be over €1bn, increasing further when all other categories are added. These tariffs would apply on trade between Ireland and Britain, as sales to Northern Ireland would be excluded from tariffs under the protocol in the withdrawal agreement.
There will also be an additional administration cost for customs documentation and health certification, estimated to be between £15 and £55 in the UK. It is reasonable to expect that it would be similar in Ireland, at approximately €16.25 and €59.45, and there are also transport delays to factor in because of inspection processes.
Beef worst hit
No sector of Irish agriculture will escape additional costs, even if there is a last minute deal. However, as Figure 1 illustrates, the beef sector is by far the most exposed. In 2019, €750.7m of a total €1.9bn beef sales went to Britain, according to Bord Bia/CSO statistics.
If the tariffs on beef imports announced by the UK government in June were applied to these sales, it would add an incredible €625.3m, almost doubling the cost of Irish beef landing in Britain.
UK tariffs on beef imports are calculated at a rate of 12% on the value of beef exported, plus a rate per tonne. This varies between £1.47/kg (€1.59/kg) on the small amount of frozen bone-in-beef and £2.53/kg (€2.73/kg) on chilled boneless beef, Ireland’s main beef export to Britain.
Dairy less exposed
If Irish dairy exports to Britain in 2019 had been exposed to UK import tariffs, it would have added a further €359.1m to the total cost of €874m. The highest UK tariff on dairy imports is on butter, at the equivalent of €2.09/kg and when applied to 42,093t of Irish butter, amounts to just under €88m.
Cheese is the biggest dairy export to Britain, with the tariff of €1.50/kg applied to the 128,055t (€388.7m) of cheese exported there, creating a massive tariff cost of €192.1m.
Whey, milk and cream are also exported to Britain in substantial volumes and would carry tariffs of €45.6m and €30m respectively, based on 2019 export volumes.
Sheep and pigmeat
Sheepmeat imports to the UK will carry a particularly high tariff, the equivalent of €2.81/kg on chilled boneless product, plus 12% of the value. However, Ireland’s exposure to the British market is relatively low, accounting for €63.2m of our total exports in 2019.
What is particularly striking is that if UK tariffs were applied to these sales, they would actually be more than the value of the product at €36.9m.
Pigmeat, on the other hand, carries a relatively low tariff, ranging between 47p/kg (51c/kg) on pig carcases to 78p/kg (84c/kg) on pork cuts. This means that Irish pigmeat sales to Britain in 2019 (€156m) would carry a tariff of €35.7m.
Best and worst case scenario
This outlines the impact tariffs would have on Irish exports to Britain (excluding Northern Ireland) if the UK and EU don’t reach a trade deal. The damage would be reduced if the UK decided to create no tariff import quotas in some sectors to prevent huge food inflation.
This is a strong possibility on a limited scale, but if a quota is created it is open to all countries, including the low-cost South American beef exporters, and this would squeeze Irish prices.
The best case scenario at this point is likely to be a basic no tariff, no quota trade agreement between the UK and EU. This would maintain Irish access in the short-term but the additional administrative and inspection costs are unavoidable.
In the medium-term, the UK will conclude trade agreements with major beef and sheepmeat exporters. Australia and New Zealand are likely to be the first of these and they will provide serious pressure on Irish beef and sheepmeat and, in the case of New Zealand, dairy sales to Britain.
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