A major external risk for the Irish agriculture sector

The UK represents our most important agri-food export market, accounting for over 40% of Irish agricultural output. It is the destination for over 50% of our beef and 60% of our cheese exports. By comparison, it accounts for 15% of exports across all sectors. It is a high value market, and its customers share the same language and similar consumer preferences. For small and medium businesses in Ireland, the UK is generally the first destination they look to as a potential export market.

Should the UK vote to leave the EU, Irish agriculture would undoubtedly feel negative consequences, both in the short-term and longer term. Already in 2016, we have seen a weakening of Sterling by over 7% against the euro, arising mainly from the uncertainty on the referendum outcome. This has reduced the competitiveness of Irish exports, with a disproportionate impact on the Irish agri-food sector.

In the longer term, the uncertainties presented by the changed trading relationship between the UK and EU pose a significant threat, as the costs of trading with the UK would, inevitably, rise.

 

Special Agreement

As part of the EU trading bloc, Ireland is not in a position to negotiate any special bilateral trade agreement with the UK. We would therefore be bound by whatever trade agreement was reached between the EU and UK.

It has been suggested that the UK would negotiate a trading arrangement with the EU similar to that of Norway, which has access to the EU Single Market, and makes a financial contribution to the EU. However, it should be noted that, under this arrangement, many agricultural products are outside the Single Market agreement, with restrictions in place in the form of tariff quotas and regulatory, non-tariff barriers (import licenses, rules of origin checks). The reintroduction of these barriers would increase costs, reduce the competitiveness of Irish exports and, ultimately, reduce the potential the UK holds as a destination for Irish agri-food exports.

 

Impact in UK and Northern Ireland

For farmers in the UK and Northern Ireland, the reintroduction of trade barriers could have similarly negative consequences, as tariff and quota restrictions could undermine their ability to export to Ireland and to the EU. Ireland remains the main export market for the UK agri-food sector, with almost €3.5bn of exports annually. UK farmers would also face an uncertain future for agriculture supports, as it is unknown what domestic support payments, and at what level, would replace the current EU CAP payments.