Agriculture ‘doesn’t have to be long-term Brexit loser’
Food and agriculture is easily the sector most vulnerable to Brexit, with a potential move to World Trade Organisation tariffs looking set to inflict an €800m hit on the beef sector alone.
But it doesn’t need to be like that, according to a new report from the Institute of International and European Affairs (IIEA), a Dublin-based policy and economic think-tank. It said agriculture can leverage the same kind of post-Brexit dynamics that have already been seen in areas like finance.
In order to maintain access to European markets after Britain leaves the EU, financial firms have been setting up operations in Ireland, many establishing regional operations here.
While it isn’t going to be an overnight solution to the huge problems facing the agriculture sector in the event a hard Brexit sees hefty tariffs imposed on exports to Britain, it does offer a way out.
“The parallel between UK financial services firms establishing in Ireland and Irish agri-business firms investing in the UK suggests an avenue of opportunity,” Frank Barry, professor of international business and economic development at Trinity, wrote in the report.
“Some of the damage of a hard Brexit would be offset if UK agri-food firms were to establish export platform facilities in Ireland to service their existing EU markets.”
Although the UK is a huge market for exports in the dairy sector, for example, UK dairy exports to the rest of the EU are 150pc of Irish dairy exports to the UK. A large proportion are branded products, which means they have high degrees of customer loyalty.
Items from industries such as confectionery, dairy, animal products, soft drinks and distilling are among the industries which are advertising and brand intensive, according to the IIEA report, which cited the prior use of Irish chocolate crumb in Cadbury’s confectionary.
The ingredients of those brand name products are precisely what Ireland will have in excess post-Brexit.
Add some products which are research and development intensive – chemicals and medical instruments among them – which will also attract high tariffs, and there is an opportunity for UK firms to invest here.
“Some of the UK firms that will suffer diminished market access may be relatively small and have little experience of overseas production: to these the familiarity of the Irish environment will be particularly appealing,” Prof Barry wrote.
Ireland will be the worst-hit of any country by the Brexit shock and the Central Bank estimates economic growth this year could be just 1-1.5pc.