A highly integrated sector
The shared land border between Ireland and Northern Ireland has resulted in the development of a highly integrated agri-food sector, with large volumes of trade annually in live animals, finished products and products requiring further processing. Overall, in 2015, exports of agricultural products from Ireland to Northern Ireland (including food, drink, forestry and animal by-products) were €750m, with imports from Northern Ireland of €567m.
The UK market is a hugely important market for Irish goods and exports in general. By comparison with the agri-food sector, however, there is a much lower dependence on the UK market across other sectors in the Irish economy, with Ireland exporting €15.6b of total goods exports (13.9%) and €18b (18%) of services to the UK
Overall, the Irish farming and food sector has a higher dependence on the UK market when compared with other sectors in Ireland, and is therefore the most exposed sector to any negative economic impact of the UK Brexit decision.
Sector by Sector
The following provides some key information on the importance of the UK market in sectors of strategic importance for Irish farming and food.
- With 65% self-sufficiency, the UK is a net importer of beef. Ireland is the main import supplier, accounting for almost 70% of UK beef imports.
- The UK is the market for 50% of Irish beef exports, with a further 45% going to the EU market.
- The UK is a high value market for beef, with prices consistently above the EU average.
- Overall, a reduction in access to and the value of the UK market would have a very negative impact on the Irish beef sector, and potentially on the overall EU beef market.
- As a mature market, the capacity of the EU beef market to absorb increased imports is low. Irish beef exports of 270,000 tonnes to the UK represent almost 10% of the intra-EU beef trade. The displacement of these exports would therefore have a destabilising effect on the overall EU market.
- In 2016, 34% of Ireland’s dairy exports went to the UK, representing 53% of cheese exports, 29% of butter and 12% of SMP (Skim Milk Powder).
- Exports of cheddar cheese were 78,000 tonnes, representing 82% of all cheddar imported by the UK in 2016. Ireland is the only significant exporter of cheddar to the UK market and the UK market is the only market of significance for Irish cheddar.
- For Milk and Cream, the UK is a significant net exporter. In 2016, Ireland imported over 800m litres of milk from Northern Ireland for processing. Of this amount, approximately 120m litres were sold as fresh milk, accounting for 25% of the Ireland’s fresh milk market.
- Retention of tariff-free access to the UK market is critically important, particularly for Irish cheddar exports. Overall, the loss of or disimproved access to the UK market could have a destabilising impact on the overall value of the Irish dairy sector.
- In addition, the uncertainty surrounding the future trading relationship between the UK and EU presents a particular threat to the current highly integrated all-island milk processing structures.
- Ireland exported 13,000 tonnes of sheep meat to the UK in 2016.
- In the UK market, almost 90% of UK lamb imports come from outside the EU (New Zealand and Australia), while UK exports go predominantly to four EU Member States, with France accounting for 50% of these.
- The key issue for the sheep sector will be the decisions taken on the division of the large EU TRQ for New Zealand lamb– any displacement of NZ lamb imports, which currently go to the UK market, could have a negative impact on the overall value of the EU lamb market.
Pigmeat and Poultry
- There is significant bilateral trade between Ireland and the UK in pigmeat and poultry products, which has been built up over many years. The disruption to existing trade flows, through tariff barriers, or other increases in costs, would reduce the overall value of these markets.
- In addition, the continuation of cross-border trade of pigs for processing is a critical issue, reflecting the overall processing capacity of the sector on the island of Ireland.
- In the tillage sector, Ireland is a net importer of grains. The geographical closeness to Northern Ireland results in some grain farmers exporting their product to Northern Ireland, rather than selling to more distant parts of Ireland.
- The imposition of tariffs on UK imports would potentially result in a re-sourcing of imports from the EU, with increased transport costs.
- On the inputs cost side, the exit of the UK from the EU presents a significant threat of increased costs and reduced availability for plant protection products and animal health remedies.
For the Mushroom sector, the UK represents 90% of the value of Irish exports, or over €80m. Barriers to trade, through tariffs, or other additional costs would undermine significantly this sector.
Finally, the Forestry sector has a high reliance on the UK market, and has experienced major growth in exports to the UK in recent years doubling its UK market share of sawn softwood timber since 2007, while 65% of panel products produced in Ireland are exported to the UK.