Dr. Kevin Hanrahan:

Those implications are forced a little bit on vets regarding product licensing on either side of the Border. Vets on either side of the Border might be using similar products. However, as licensing arrangements diverge between Ireland and the UK, some of those day to day decisions which vets and farmers make will be impacted in ways we cannot foresee. Things they do currently without thinking about them will no longer be possible.

Deputy Thomas Pringle asked whether we had revisited the analysis, and it is clear that we have not yet done so. We are still in a fog regarding what the UK will be seeking and what the EU will be willing or unwilling to give. Our opening statement commits us to being ready to do this analysis once we get a tiny bit more clarity on what the possible scenarios are. It is an infinite set of possibilities and we could be employed forever trying to do them. We want to start to do the ones that are most politically likely, given that this is where the interest will fall.

The numbers provided in the report, in terms of the magnitude of the trade destruction we are looking at if the UK exited, are based largely on similar work the ESRI did for the Department of Finance, which was based on work done by US economists Hufbauer and Schott. It used a gravity model of trade and examined the extent to which being a member of the EU leads members to trade more with one another than with non-members. Economists examined it in terms of trade in all merchandise, non-agricultural merchandise and agricultural merchandise. They did the latter analysis given that tariff barriers to trade in agricultural products are still much higher than in non-agricultural manufacturing goods. They found the impact of membership of the EU across all merchandise trade was approximately 21%. All things being equal, trade was 21% higher if one was a member of the EU. We and our colleagues in the ESRI use the estimate as a proxy for what would be destroyed if one left the EU.

The analysis also examined trade in agricultural merchandise and non-agricutural merchandise, given that they are different in terms of how tariffs work. The proportional impact the American economists found for agricultural trade was very large, over 50%. Would this level of destruction arise if the UK left the EU in terms of the trade relationships between Ireland and the UK? These are the dimensions we examined in terms of what led us to the €150 million versus the €800 million in addition to trying to think about the fact that if we cannot ship our beef or cheese or whatever to the UK, it will not disappear but will find an alternative market. We asked to what extent we need to change the price to get into those markets. As the Deputy rightly pointed out, getting a new market for Irish cheddar is not easy. If it were easy, we would already be in there. Often, it is sensible to assume that to get the market one would have to accept a lower price point, but how much lower? We have no hard evidence on how much lower the price would have to be, given that this has never happened before.

We use two very blunt assumptions. The product would not just disappear and we would still be creating the beef and cheese, and what we were not shipping to the UK would find another market, but at a lower price. We have two price points, namely minus 15% and minus 30%. Those four key assumptions are what creates the range of impacts in the paper between €150 million and €800 million.

By my guess, the finding that Irish agrifood trade with the UK would fall by 50% is too large because many other factors drive that trade. For example, we are nearest neighbours, we have similar cultures and culinary preferences and there is a high degree of integration between the agrifood industries on both sides of the water and North and South. There are many reasons to expect that, even after Brexit, Irish-UK agrifood trade will continue to be important. It will not shrink by half, although it will probably shrink in value, if not also volume, over time.

Developing new markets is not Teagasc's remit, but Bord Bia's. I have been present for statements by Bord Bia where it was actively helping the agrifood sector to develop new markets.

Does Mr. Donnellan wish to take Deputy Penrose's questions?