Meat sector must diversify to avoid Brexit ‘catastrophe’

Processors call for state aid in modernising plants and product development



A no-deal Brexit would be “catastrophic” for Ireland’s €1.7billion  meat exports trade with Britain, Meat Industry Ireland (MII) has warned.

It is calling on the Government to make diversification of the meat industry an urgent priority and to support investment in modernising cutting plants and product development for new markets.

“The scale of the investment needed, the urgency for action and the return it delivers to the overall economy, particularly the rural economy, warrants appropriate Government support,” said MII director Cormac Healy.

“For this to happen we need changes to the State Aid rules at EU level.  While our Government has worked well to position Irish concerns in the Brexit negotiations and has increased  investment in food marketing and low cost agri-loans, the progress on State Aid is lacking.

“Now is the time for companies to be making such investments and now is the time for both Brussels and the Irish Government to be facilitating important investment projects with meaningful grant assistance.”

However, Minister for Agriculture Michael Creed responded by saying: “Investments in large companies, including those in the food sector, are very much constrained by EU State Aid Rules designed to ensure a level playing field across member states when it comes to State investment in industry.

“These rules are an essential element of the Single Market that is such a critical platform for Irish exports.

“Against the background of Brexit, and as part of its contingency preparations, my Department has been engaging intensively with the European Commission on flexibilities that might be required under these rules to permit the State to assist industry  in exceptional circumstances. These discussions are continuing,” he said.

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In the starkest assessment yet of the potential impact of Brexit, MII said: “A No Deal Brexit is the worst-case scenario for Irish beef, the wider meat sector and the whole of the Irish agri-food sector. It would plunge us into a situation of World Trade Organisation (WTO) tariffs, which would cripple trade.”

Disruption

The European Meat Association has estimated that the imposition of WTO tariffs would reduce exports of meat from the EU to the UK by up to 84pc  for beef, 76pc for sheepmeat and 48pc for pigmeat.

And even if a ‘soft Brexit’ agreement is reached, MII warned that customs and veterinary checks on meat produce would be an issue “in any form of Brexit as the UK would still be outside the Single Market and Customs Union”.

“Beyond the threat of major loss of business with the UK arising from a No Deal Brexit, MII is also concerned for the potential disruption in trade by Irish exporters with continental Europe and Scandinavia, given that so much of our exports to these markets transit the UK landbridge.”

An estimated 90pc of our meat exports to Europe transits the UK.

MII also warned: “There are no markets that could absorb, in the short or medium term, the major volumes of beef that would be displaced by a No Deal Brexit.

“The EU beef market would be driven into an immediate surplus, with beef self-sufficiency jumping from 102pc today to 116pc.

While British ministers have said they are confident of negotiating a phased Brexit withdrawal agreement with the EU ahead of the November deadline for a deal, little progress has been made on resolving what the EU has labelled the ‘red line’ issues – including the Irish border.

The EU’s chief negotiator Michel Barnier last week said it was “critical” and “urgent” to come to a resolution how to resolve the conundrum of how to avoid a hard border between the Republic and Northern Ireland.

The ‘backstop’ – a safety net that guarantees an invisible border, though there is no agreement on how it will work – “is critical to conclude negotiations,” Barnier said after meeting with UK Brexit Secretary Dominic Raab on Friday in Brussels.

British Prime Minister Theresa May has proposed a long-term solution that would see Britain keep all the EU’s rules for trade in goods and agri-food – in theory removing the need for customs and standards checks at the border.

But under her blueprint, the UK would be able to adopt different rules from the EU on the services trade, which makes up 80 percent of the British economy, as well as its own immigration and international trade regimes.

EU officials regard this approach as unacceptable cherry-picking.

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