Mr. Joe Healy:

I thank the committee for giving us the opportunity to outline the key issues of concern for Irish farming and the agrifood sector arising from Brexit. I apologise in advance because I am more than likely to repeat a few of the points the other Mr. Healy in attendance has made.

In the ten months since the Brexit vote, there has been a huge amount of analysis undertaken of the potential implications for the Irish economy and the farming and food sectors of the United Kingdom leaving the European Union. The results are clear and stark. Ireland is the economy in the European Union that will be the impacted on most by Brexit and the farming and agrifood sector will be the one impacted on the most. The sector generates economic activity in every parish, village and town across Ireland, supporting 300,000 jobs, directly and indirectly. Last year alone, food and drink exports topped €11 billion. The sector is particularly vulnerable to Brexit for a number of reasons.

Ireland's agrifood sector has a high dependence on the UK market, with 40% of exports destined for the UK market annually. They include 50% of our beef, one third of our dairy products, over half of our pigmeat exports and more than 90% of all mushroom exports. Disruption caused to the UK market by the imposition of tariff barriers, border checks, certification requirements and other regulatory changes could render this trade uneconomic. High EU tariff protection applies to products of major importance to Irish farmers such as beef, dairy and lamb. Tariffs on imports from non-EU countries are in place to protect the market for European farmers. A significant reduction in import tariffs by the United Kingdom for non-EU countries such as the Mercosur countries of South America would fundamentally undermine the competitive position of Irish and EU products on the UK market and reduce the value of the UK market.

The existence of the land border between Ireland and Northern Ireland creates a serious challenge. Every year thousands of animals and huge volumes of agricultural produce cross the Border to Northern Ireland for finishing or processing as part of a highly integrated supply chain.

These trading links, which have built up over many years, are critically important for farmers and processors on both sides of the Border. Brexit presents a real risk of a hard Border with customs checks and other controls. The departure from the EU of the UK, which is a net contributor to the EU budget, will create uncertainty about the size of the CAP budgets after 2020. A reduction in the CAP budget would have a direct negative impact on Irish farm incomes across all sectors.

I would like to highlight some of the specific issues for our main sectors. The threat from Brexit for the beef sector is frightening. The UK is the market for 270,000 tonnes of Irish beef, or approximately half of our beef exports. The IFA is continuing to strongly support efforts to secure new markets for Irish beef. Any damage to our position in the UK market would see significant displacement of Irish beef onto EU markets, such as France, Germany, the Netherlands and Italy. This would undoubtedly destabilise the EU beef market, thereby undermining price returns to farmers in Ireland and across Europe. In the dairy sector, one third of our exports go to the UK, which is our main market for cheddar. There is no alternative. A loss of access to the UK market would destabilise the overall dairy sector here. Brexit presents a particular threat for milk processors that depend on an all-Ireland milk pool. The same thing applies to the pigmeat and poultry sectors, in which large volumes of produce move across the Border for processing. The key issue in the sheep sector is the future destination of large volumes of New Zealand lamb imports.

There are real threats to virtually every sector of agriculture, from beef, dairy and lamb to mushrooms and forestry. These threats include reduced access to the UK market through tariff barriers, a loss in the value of the UK market through increased substandard and low-cost imports and the potential reduction in the CAP budget after Brexit. The ESRI has estimated that WTO tariff rates would virtually wipe out our agrifood trade to the UK, with losses of €2 billion to the meat and dairy sectors. At farm level, Teagasc has looked at the impact a hard Brexit would have on farm incomes in a scenario where there is a 10% reduction in the CAP budget and lower UK food prices. Farming would be devastated in such circumstances, with average incomes decreasing by 26%. Cattle farm incomes would be worst hit, with a massive 37% reduction. I remind the committee that in this sector, direct payments already account for over 100% of family farm incomes in most cases.

Since last year's vote, the IFA has undertaken a campaign of engaging with key stakeholders in the negotiations. We have highlighted the real threats posed to farming livelihoods. We have met the Taoiseach; the Ministers, Deputies Creed and Flanagan; the head of the EU negotiating team, Michel Barnier; and the British ambassador to Ireland, Robin Barnett. The IFA Brexit event at Goffs, which was attended by more than 700 farmers and industry representatives, was addressed by the European Commissioner for Agriculture and Rural Development, Phil Hogan; Mairead McGuinness MEP; the Minister for Agriculture, Food and the Marine, Deputy Creed; and other speakers from the industry. The IFA is actively working with European farming organisations to highlight the damage a hard Brexit could do to Europe’s €45 billion worth of food exports to the UK. We are in close contact with our colleagues and neighbours in the Ulster Farmers Union, representatives of which are in the Gallery today, and the National Farmers Union. They share many of our concerns about the impact of Brexit.

The IFA published a policy document in March as part of its overall response to Brexit. Two key priorities for farming in the Brexit negotiations are identified in the document, Brexit: The Imperatives for Irish Farmers and the Agri-Food Sector. Our first key priority is to maintain the closest possible trading relationship between the UK and EU while preserving the value of the UK market. It is not sufficient for tariff-free access to the UK market to be achieved. Equally, the value of EU agrifood exports cannot be undermined by an increase in low-cost food imports into the UK or by imports that do not meet the high standards of food safety, animal welfare, health and environmental controls that are required of EU producers. The optimum outcome from a trading point of view is for the UK to remain within the EU’s customs union. This would solve many of the border issues that may otherwise arise, such as checks on origin of imports from third countries. If the customs union outcome is not possible, there must be a comprehensive free trade agreement that includes the following elements for agriculture and food: tariff-free trade between the UK and the EU for agricultural products and food; the maintenance of equivalent standards in food safety, animal health and the environment; and the application of a common external tariff for imports to the EU and the UK.

Our second key priority is a strong CAP budget in the period after 2020. This is critical for farm incomes, farm output and wider economic activity. There cannot be a reduction in the CAP budget arising from the UK exit. A reduction in spending power for Irish agriculture arising from a cut in direct payments to farmers would have a significant and negative knock-on impact on production decisions and on the demand for goods and services in the rural economy. Farmers and the food industry have been badly hit by the devaluation of sterling over the past year. The beef industry lost €150 million in this way in the second half of 2016. This had a knock-on effect on wider rural areas. In the event of further significant decreases, farmers and the food sector will require direct support through CAP market supports and flexibility on state aid rules. Increased resources for market access and promotion must be allocated to the relevant bodies, including the Department of Agriculture, Food and the Marine and Bord Bia. Discussions on the future EU-UK framework, including transitional arrangements, must commence early in the withdrawal discussions in order to minimise uncertainty during the negotiation process.

We are at the starting point of the withdrawal negotiations. The EU is adopting a phased approach. It has identified four initial priorities in the withdrawal negotiations: safeguarding the rights of EU and UK citizens, agreeing the UK financial settlement, avoiding the creation of a hard border and reaching agreement on dispute settlements. It has outlined that discussions on the future relationship will form part of the second phase of the negotiations. In the initial stage of the negotiations, it is critical that minimising the disruption to trade, for example by maintaining equivalent standards in the areas of food safety, animal health and welfare, is a priority issue in the discussions on the Border. The UK must fully meet its obligations to the EU budget for the entirety of the existing CAP reform programme, which runs to the end of 2020. To minimise the uncertainty for farm enterprises and the agrifood industry, there is a real need for progress to be made quickly. Therefore, discussions on the second phase should commence as soon as possible.

Brexit is the greatest threat to Irish farming we have seen in our lifetimes. The livelihoods of thousands of farm families and the future of the agriculture and food industry are at stake in these negotiations. Over recent months, the IFA has clearly set out for political leaders in Ireland and across the EU the critical issues for Irish farming and the food sector in the negotiations. It has identified the outcomes that must be delivered to secure the interests of this vital sector in the years ahead. I assure the committee that as progress is made with the negotiations, we will keep up the pressure by continuing our engagement with stakeholders in the Oireachtas, Government Departments, the European Parliament and the European Commission. I thank the committee for its time.