Professor Alan Matthews:

I thank the Deputies for those questions, which cover a very broad field. First of all, in terms of the sector, Deputy McConalogue is absolutely right. The beef market is clearly the most vulnerable. The way to look at it is in terms of the degree of self-sufficiency for the product in the UK and then the difference between the UK and the world market price. In the case of dairying, I agree that the price differences are less. There will still be a challenge to find alternative markets, for example, if we need to diversify somewhat. There is still probably a premium for some of the dairy products, but much less so than in the case of beef, lamb and poultry. I am of the view, therefore, that meat products will be most affected. Some of the more processed products, such as the infant formula, beers and spirits, are also less dependent on the UK market. Obviously, the value added back to the farmer is much smaller in the context of these industries. In terms of looking at the impact at the farm gate, it is essentially the meat sector in which we are going to see problems.

Deputy McConalogue asked about the future of UK agriculture. As the Deputy said, it is not directly of concern to the committee but it is of great interest nonetheless. We have seen very little guidance as yet from the Ministers at the UK Department of the Environment, Food and Rural Affairs as to what they might be thinking. They have promised a consultation with their farmers. There are very strong environmental interest groups in the UK, which is a very densely-populated country.

These interest groups would like to see more of the funding go towards environmental improvements, but the National Farmers Union is keen to see as much of it as possible retained to provide income support. Given what the United Kingdom has stated in the past, it is clear that it will probably support its farmers to a lesser extent. Having said that, I do not assume it will reduce the level of support to zero. We will probably not have clarity on the question for at least a two-year period while consultations are under way.

There was a question about new markets. I agree that we have been successful in moving away from dependence on the UK beef market. It seems that we will have to continue in that regard. The UK market will be less attractive; we will, therefore, be looking to try to diversify further. The markets outside the European Union present a problem in that they are less valuable than the EU market. I am unsure whether I would necessarily suggest we give up these markets, but once export subsidies went, it was clear that we were competing in them at world prices. It may well be that in the case of some commodities world prices will recover in the future and these markets may become more attractive again. However, I believe the EU market will be the most obvious place to start, but that is not to say some of the Asian markets where demand is growing will not play a greater role in the future.

The question was asked by Deputy Ferris whether the United Kingdom would have to meet EU standards. He also asked about the value of the United Kingdom leaving. That was a question voters in the United Kingdom had to answer in the referendum. Even if the United Kingdom was to retain the same standards in the future, the actual mechanisms for recognising those standards would be different simply because the United Kingdom would be outside the Single Market. I share Deputy Ferris' point of view in the sense that even if the standards were to remain the same, many of them are international and not necessarily EU standards. They are agreed to under the Codex Alimentarius and by other standard setting bodies. The key issue is who would get to decide whether the UK or Irish plant, depending on the direction of trade, was meeting the standards of the trading partner. That represents an extra step. It would involve not only approving the plants but also inspecting consignments crossing borders, at least on the basis of risk. There would be additional costs that we should try to minimise as much as possible.

I agree that the issues surrounding supply chains with the North will need close consideration. I am unsure who asked the question, but someone asked whether there was an overall estimate of the cost of Brexit. I am aware that Teagasc has done some work on this issue. Now that there is a little more clarity about the scenarios involved, I imagine Teagasc will be working on modelling estimates. I do not have a figure that I could give to the committee, but I know that Teagasc is working on the issue.

Two issues arise specifically about the North, the first of which is whether the production base might contract if support was to be reduced relative to the current arrangement. The second concerns the greater complexity of moving supplies across the Border. For the larger players, this might not be such a great issue because they would be able to handle Customs declaration forms and inspections. I reckon it would be a bigger problem for smaller firms that only export intermittently but for which it could be an important source of additional revenue.