Brexit a double-edged sword for Northern Irish agri-food sector
The jury is out on the impact Brexit will have on the North’s £4.7billion agri-food and livestock feed sector, reports Chris McCullough
NORTHERN Ireland farmers could end up paying less for their livestock feed post Brexit depending on which trading deals are sorted out between nations.
Northern Ireland will be the only part of the UK that physically borders the European Union which will present trading challenges between the two Irish countries.
However, Brexit brings a chance for the feed companies to import grains from countries outside the EU that will maintain tariff-free trading agreements with the UK.
But, for the livestock feed companies based in the north, Brexit will make exporting feed to neighbouring Republic of Ireland costly, depending on the trading arrangements that are developed.
Thompsons Feeds is known as the largest multi-species feed mill in all of Europe and it just happens to be based in Belfast, Northern Ireland.
Company chief executive officer Declan Billington said Brexit could give the industry access to GM crops in the UK.
Mr Billington said: “If I was to sum up Brexit in one word it would be, uncertainty. Uncertainty in every aspect of our business.
“With 30pc of Northern Ireland production exported outside the UK and with EU tariffs on milk and beef products operating in the 50pc range on exports to Europe, exports become impossible without a trade agreement.
“Northern Ireland is the only region of the UK which will have a land border with Europe. Post-Brexit, the default position is that the border will once again have a significant presence in our daily lives, with customs inspection and duty payments to be dealt with.
“The question is, where the border, affecting 3pc of the UK population, ranks in importance within the UK government?”
With many EU trade agree- ments currently in place, Northern Ireland agri businesses could be hit hard in terms of exports once Brexit kicks in.
Mr Billington said: “Europe has 53 trade agreements with other regions around the world through which we also trade.
“For some of our local companies, losing access to these agreements poses a direct threat to their export businesses including milk powder to West Africa and catering products to our world’s catering companies.
“For others, it poses a threat to the price processors can afford to pay for the animal with the potential loss of sale of fifth quarter offal products into areas such as Asia.
“On a positive note, the ability to access grains tariff free, especially maize from North America, might make our input costs cheaper as will the ability to access UK-approved GM crop varieties yet to be approved by Europe.
Tariffs
“However, given the €95 per tonne tariff on feed wheat and a price floor of €154 per tonne on maize, our ability to trade feed and flour across the border into the Republic of Ireland will restrict the extent to which we can benefit from these opportunities in Northern Ireland.
“And to this uncertainty around future trade, we need to add currency volatility. Although the decline of sterling increases the cost of farm inputs, it also makes our producers’ exports appear much cheaper on the world markets, assuming we do not face higher access tariffs.
“However, within the UK, feed and, thus food, will appear more expensive. The challenge is to get cost recovery on that 70pc of Northern Ireland food business traded into the UK market.
“In the short term, currency can be hedged but ultimately the hedge will unravel and within the highly competitive supermarkets will full cost recovery be achieved?”
The Northern Ireland Food and Drink Association recently published a report on how Brexit might be made to work for the North’s agrifood sector.
“However, the right policies and negotiating positions need to be deployed and the question is, will the UK government listen to Northern Ireland industry?” asked Mr Billington.
“The answer is, as with everything Brexit related, uncertain.”
AGRIFOOD BUSINESS IS NORTH’S LARGEST PRIVATE SECTOR EMPLOYER
THE agrifood sector is Northern Ireland’s biggest private sector employer and export earner with around 75pc of the £4.7bn business being exported.
Around half of the output is consumed in Great Britain with the remaining quarter finding a home in the EU, principally the Republic of Ireland, and the rest going into other global markets.
The all-Ireland nature of the feed and food trade means that a ‘hard border’ between north and south would inflict massive damage on both parts of the island.
While Brexit may bring the potential for increased supply of food to mainland UK, which is heavily dependent on imports, there are fears that Whitehall will adopt a cheap food policy based on low cost food from the global marketplace.
Already it appears that they will be keen to change the pattern of farm support which delivered cash payments of around £240m to the rural economy each year.
Robin Irvine (pictured), the CEO of the Northern Ireland Grain Trade Association, says the potential for disruption to trade flows is a major concern to the animal feed trade in Northern Ireland as they await the unfolding of the terms of the UK withdrawal from the European Union.
“We have concerns that UK agriculture will lose the support from government that it enjoyed through the EU Common Agricultural Policy and it will only survive through the market delivering significantly higher food prices.
“Another concern is our massive dependence on the global marketplace for feed ingredients with 90pc of the 2.3 million tonnes of raw material required each year arriving by sea. Around 45pc of the materials used are from the Eurozone, 45pc are dollar