Neale Richmond (Fine Gael)
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On behalf of the committee, I welcome from Teagasc Professor Gerry Boyle and his colleague, Dr. Kevin Hanrahan, to talk us through more matters on our busy schedule for today focusing on the agriculture industry. We have had a lot of engagements, including a very thoughtful one immediately prior to this and there is still a great deal more to do today. As such, I will waste no more time in asking Professor Boyle to make his address.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

Professor Gerry Boyle:

Teagasc very much appreciates the opportunity to speak to the committee on the issue of the withdrawal of the United Kingdom from the European Union. Naturally, our contribution will focus on the agriculture and food sector. Unsurprisingly, our overall view is that the best outcome from the perspective of the Irish agriculture and food sector would involve as little change as possible to the current nature of trading and relationships among Ireland, the European Union and the United Kingdom. I refer members to our presentation handout. I will talk them very briefly through a few key points. A great deal of the information on the initial assessment of the impact of Brexit, or at least what has been referred to as a "hard Brexit", is well known at this stage. I will focus on a couple of aspects which are perhaps not as well appreciated.

The key issues include the trade impact which is the dominant economic impact, but I also wish to focus on some issues related to North-South agri-supply chains. Teagasc is also of the view that there is a potential negative impact on the Common Agricultural Policy budget. The final issue I intend to address is what will be required to enable Irish companies to diversify from the UK market to the greatest extent possible and what we consider that process will involve. Teagasc and colleagues in the Department of Agriculture, Food and the Marine and our sister agencies attached to that Department have organised a very significant response to the Brexit challenge by establishing a dedicated unit to monitor continuously developments in that regard. We have also established a working group across the entire organisation comprising colleagues in various research areas, including processing research and our advisory service nationally. We hope, with our colleagues in the Department, to be in a position to respond to issues as they emerge.

As the situation pre and post-Brexit is well known at this stage, I will not spend too much time on it. Pre-Brexit, we enjoy as a member state of the European Union a situation vis-à-visthe United Kingdom in which regulatory frameworks are identical and no customs procedures apply to trade. No tariffs are levied on trade. Post-Brexit, a known unknown, there is the possibility that regulatory frameworks will diverge. That is a concern which will add to the cost of trade. If the United Kingdom moves outside the customs union, there will be clear additional costs in the processing and administration of customs requirements. Of course, the major potential impact is the imposition of tariffs on trade with the United Kingdom, as well as third country competition for Irish products in the UK market. These are well known issues. A variety of analyses have been conducted by colleagues in Teagasc, led by Dr. Hanrahan, to quantify the impact of different Brexit scenarios. In simple terms, the impact of a hard Brexit boils down to the potential tariffs that could be levied on Irish imports into the United Kingdom.

In simple terms, the impact of a hard Brexit boils down to the potential tariffs that could be levied on Irish imports into the UK. We have tried to simplify, in the bar chart members have before them, the complex potential tariff arrangement that would be in place in the event of the World Trade Organisation, WTO, tariffs applying, for example, if there was no deal. Clearly, this is at the outer extreme of possibilities. Members can see from that chart that the beef sector would be substantially hit with an average tariff of the order of 70% in that scenario, the dairy sector would be hit by an average tariff of 50% and it goes down along the various foods that are imported into the UK. This is a very complex matrix of tariffs. A total of 2,500 tariff lines exist in regard to trade between Ireland and the UK. This is an attempt to provide an overview but the impact of such tariffs is obvious. One would not need complicated economic analysis to determine that faced with those kinds of tariffs, the competitiveness of Irish products in the UK would be affected to a catastrophic degree. If Britain decided to revert to the traditional cheap food policy and allow imports from third countries, that would add further to the competitiveness threat. Broadly, the impact on trade with the UK generally is pretty well known, at least as far as an extreme hard Brexit scenario is concerned.

We have become concerned recently about the implication of a hard Brexit for the agrifood trade North and South. We have extracted some data for 2016 which illustrates the potential impact at a micro level. There has not been sufficient appreciation of the disruption that could be caused to local supply chains, particularly those close to the Border. Members can see that in the dark green line on the chart we have exports to Northern Ireland in 2016 and the lighter green line, with the negative numbers, indicates the imports from Northern Ireland. There is a good deal of information given there but I want to single out three trade flows that are very significant. The first one to draw to the members' attention is the substantial imports of dairy produce from Northern Ireland into the Republic. A total of 80% of these products are raw milk for further processing in the south of Ireland. If that supply chain is disrupted, it will have severe implications for these supply chain flows.

I would also draw members' attention to the imports of animal foodstuffs, which is very important in a local context. The port of Derry is the dominant source for importation for most of the northern region of the country. Members can note there are substantial flows of product. It is evident that any disruption to that supply chain would have very serious consequences for agricultural sector in the South.

I would also draw members' attention to live animal exports to Northern Ireland. Most of the other exports are in the form of processed goods and of course they will be affected. The reason I draw their attention to live animal exports is that many sectors on the Border depend substantially, for the processing of their product, on factories in Northern Ireland. One sector that comes to mind is the pig industry, which is concentrated in the Border regions. We would be very concerned about it in the event of a so-called hard Brexit. These local factors have not been brought into the public domain to date, at least not in a formal way.

We have attempted to bring together the impact of tariffs and the potential impact of, what we call, a hole in the CAP budget should the British withdraw from the CAP, as would be expected post-Brexit, and, most importantly, this hole would not be compensated by other member states. We hypothesise that the hole could have of the order of 10% of a negative impact on the budget. If we bring that CAP effect together with a tariff effect, that will have a huge impact on farm incomes. These are indicative estimates and we call them static effects in the sense that they do not take account of what one would expect in the longer run, namely, that producers would respond to these changes and adjust their activities but, nonetheless, it gives an order of the magnitude involved. Members will see from looking across the bottom of the chart they we have the various systems of production in the Republic in the dairy sector, cattle fattening, sheep and tillage sectors and that what we call the policy shock, which is Brexit, will cause an impact on tariffs but it will also affect prices. By bringing the two together in the blue line on the chart, members can see that our estimate is that the reduction in incomes - this would be a permanent reduction which would not be compensated - would be of the order of 35% in the cattle sector and of the order of 20% in the remaining sectors. In a nutshell, that represents what might be termed the extreme competitiveness shock we could face.

I draw members' attention to the last slide. It is not possible to capture the complexity of this slide without having the animations on, but I will do my best. We in Teagasc believe that we must focus on how we can minimise this shock. Clearly, our view is that we need to focus, as never before, on developing the innovation capacity of our farmers and especially of our food companies. Everyone talks about market diversification and there will have to be more diversification but there is not a full appreciation of what is involved in it. It will require all the organs of the State - Enterprise Ireland, Bord Bia and so forth - to identify routes to market and so on but it will also involve and require a substantial investment in developing innovation capability within our food companies and within support services in the research and development area.

We believe there are opportunities that we can exploit. There is a number of technologies that I would like to summarise that we can exploit and that we need to do that in the next few years through a determined strategy to enable diversification to be realised. For example, we need to work on extending the shelf life of products for faraway markets. There is huge scope in the dairy sector for further fractionation and the addition of value to milk. Country of origin labelling will be very important as will the deployment of leading analytical capabilities to support food companies in new markets and in developing existing markets. In particular, we would draw attention to one area that needs a great deal of work, particularly as far as the Asian and Chinese markets are concerned, that of understanding the sensory requirements of consumers in these markets.

I have just come back from a very illuminating trip to China. Teagasc is very concerned about the cheddar market in the UK, on foot of Brexit, because 65% of our cheddar exports go to that country. British people like cheddar, and not every other country appreciates the exceptional quality of this product. So far, Chinese consumers have not really embraced cheese at all. From our point of view, that is a challenge to be overcome. Extensive sensory analysis of Chinese consumers in situwill be required so we can identify what type of cheese products will be attractive to them. It is a growing market. Similarly, there is huge potential for growth in south-east Asia. We have to do a great deal of work to penetrate such markets.

I would like to speak about the development of smart ingredients in recent years. Senators will be aware that infant formula is a big component of our overseas market at the moment. The unique features of the Irish production system ensure that there is quality and that the products are produced in a sustainable manner from the perspective of animal welfare. We need to develop smart technologies that enable us to penetrate those markets. The success of Ornua's investment in the Saudi market over recent years is an example of this. The extraordinary nature of the product that is used in the production of labneh cheese is probably not fully appreciated. An ingredient that is shipped in powder form from Ireland is reconstituted as a soft cheese in the Saudi factory. That is based on Teagasc technology. That is an example of what I mean when I talk about innovation. There are many other opportunities for potential innovation that we need to exploit quickly.

If I was to leave the Chairman with one message, it would be that although we are facing a definite competitiveness shock, even in the most benign scenario, we must bear in mind that opportunities are available to us to minimise that shock, at the very least. That boils down to a commitment to continually innovate in support of Irish companies. I have mentioned the Chinese market on a couple of occasions because it is very important. Teagasc is in the process of developing a laboratory in the University of Fujian in China to support Irish-based companies in the Chinese market. More initiatives of this nature are needed if we are to ensure the market diversification opportunities that exist in China are fully exploited.

Neale Richmond (Fine Gael)
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I thank Professor Boyle. I appreciate his in-depth contribution to our proceedings. It will play an important part in our work.

Joe O'Reilly (Fine Gael)
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I join the Chairman in welcoming the director of Teagasc, Professor Gerry Boyle, and his colleague, Dr. Kevin Hanrahan. I congratulate both of them on the degree to which Teagasc has been engaging with this critical issue for Irish agriculture. It is encouraging that Teagasc has a dedicated unit and a working group on Brexit. It is clear from the nature of the paper that has been presented that Teagasc's research in this area is in progress. That is to be welcomed. It is reassuring for us, as representatives of taxpayers, that this important work is being done.

I am very happy that Professor Boyle has focused on the micro-aspects of agriculture in the communities of the Border region. Others have failed to focus on such matters. As the Chairman will be aware, I have attempted to raise a few of them at meetings of this committee in recent weeks. It is very good that Professor Boyle has focused on them today. I will give a practical example of what we are talking about across a range of areas. Lakeland Dairies, which has a major processing plant in the small town I live in and is the key employer in that town, sources much of the milk it processes in that plant and in its Lough Egish plant from North of the Border. Conversely, important pig processing activities take place North of the Border in many instances. Such cross-Border agriculture movements are critical. How hopeful is Professor Boyle that we will be able to maintain today's veterinary standards after Brexit? If imports from non-EU countries, including the Mercosur states of Latin America, are accepted, the application in the UK of a cheap food policy, as it is called and as it is popularly known, will be to the detriment of the maintenance of proper standards.

I would be interested to hear Professor Boyle speak further about the level of potential tariffs. I think he said in the substantive document he presented earlier that the UK could set tariffs with the Republic at a lower level. If I understood him correctly, the UK might be able to set favourable tariff ratings or customs ratings. Maybe he will elaborate on that. Wearing his hat as a distinguished economist, does he see any great prospect that the current free trade arrangement between the UK and the EU will be maintained? If not, to what degree will it be diluted? I know that a graph in the paper that has been presented to us today sets out estimates of potential tariffs, but I would like to know what the actual level of impact on each farmer will be. I am afraid that small farmers will not be viable in this context and we will move towards factory farming. I am scared that if large factory units are needed to achieve the economies of scale necessary to deal with the tariff question, there will be awful implications for rural Ireland, including the breakdown of society as it is known in small towns and communities across this country. I ask Professor Boyle to comment on the degree to which the status quocould be sustained in this eventuality. As an economist, what does he think the Government can do to mitigate the impact of tariffs and customs? How much could the Government potentially invest to this end?

I would like to comment on the figures that have been presented with regard to the cross-Border dimension. It is amazing that Brexit will have effects across such a range of areas. As we have noted, the live trade across the Border for processing is very large. The solutions proposed by Professor Boyle at the end of his presentation are very interesting. He said that other markets will be examined from a "sensory" perspective. He might explain what he means by terms like food "fractionation". We do not want to discuss any company in a very specific fashion as it would be an inappropriate exercise in the absence of the principals of that company. Having said that, does Professor Boyle think companies like Glanbia and Lakeland Dairies, which have a presence in my own area, will be fit to absorb the costs which will be involved in adjusting to market diversification?

It is great the witnesses introduced that cautionary note. There is an assumption that market diversification will come easily. It is a bit like the UK internally claiming it will establish trade with the old Commonwealth to replace trade with the EU. The former Taoiseach, Bertie Ahern, pointed out at this committee several weeks ago that for every 5% of trade the UK would lose with the EU, it would have to achieve 25% new trade with the old Commonwealth countries to redress the balance. Will we be fit to absorb the costs of market diversification and getting ourselves into new markets? What exercises would the Government want to take in this regard?

I am delighted that the focus of today's conversation is impacting on what is real life of the people I represent. The trading relationship between farming communities North and South of the Border is enormous. It is great Teagasc is grappling with that question and how we might deal with it. After hearing the witnesses, I am also concerned we could be arriving at a situation where small farming, as we understand it in County Cavan, could no longer be viable. With the Common Agricultural Policy, CAP, does Teagasc believe there will be a pull to the east? What impact will the UK contribution not going into the CAP budget have? Again, that will be a challenge to small farmers in my area. We do not want to be too much of a Jeremiah on this and still hope for the best. However, it is a concerning scenario.

Paul Daly (Fianna Fail)
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I welcome our two guests this morning and thank them for their comprehensive presentation.

As is well known at this stage in the Brexit discussion, the only certainty is the uncertainty. Several other witnesses and external commentators have touted the idea of Northern Ireland getting special status. In that hypothetical scenario of an all-Ireland agricultural model, we would think we have got a good deal. When all is done and dusted, it would potentially solve many of the problems which my colleague, Senator Joe O’Reilly, highlighted with regard to the flow of milk, live cattle and so forth between North and South. However, delving into it, Republic of Ireland farmers would still be in the CAP scenario. If it were an east-west border between Ireland and the UK, there would still be tariffs on products from the Republic going to the UK but none on Northern products as it would still be part of the UK, irrespective of its new status within the European model. Potentially we may have to create our own agricultural border if Northern Ireland gets special status to avoid the hard Border because of the Good Friday Agreement.

While I accept this is all hypothetical, it is potentially one possible outcome. Will Teagasc tease this out a little more and give us an insight into what it thinks its organisation's role would be in that complicated all-island agricultural model after Brexit?

Using the cheddar example and new markets, it is not just the Chinese who do not have a palate for cheddar cheese. Our continental European friends are not lovers of it either. The UK is a specific market for this product. Other products have been affected too, such as the mushroom sector which was affected immediately. Due to the perishability factor, mushrooms cannot be exported to China. While we have always explored creating new markets, no knee-jerk reaction in the world because of the current situation with Brexit will make a further afield market viable. Where does Teagasc seeing us going in that situation?

Brian Ó Domhnaill (Fianna Fail)
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I thank Professor Gerry Boyle for engaging with the committee.

The whole issue of tariffs is a significantly important but divisive issue. The customs union, with the free movement of people and goods, has been beneficial to the island of Ireland. There are massive implications, which Senator O'Reilly touched on, for Border milk producers, the dominant commodity transported between North and South. There are processing facilities right along the Border, including in counties Cavan and Donegal.

In terms of our bargaining position, what is Teagasc’s view on what we should be trying to achieve? The UK cannot charge a tariff because it is part of the EU. However, if the customs union is removed, the UK would come under World Trade Organisation rules, which could allow it to apply tariffs which would be on the upper limit of the European tariffs. The consequences would be dramatic for Irish food exports and right across the economy. What are the best political tactical moves to mitigate this? Have there been any talks with Teagasc’s counterparts in the UK on this? What are the soundings coming from the British food and drinks industry on this issue? I assume it would see it as less competition. Would it see tariffs from a competitive viewpoint in that it could keep out Irish exports and undercut them in certain markets, cheddar cheese being one example?

Professor Jonathan Tonge from the University of Liverpool told the British parliamentary committee examining this issue that there is the potential for a border arrangement within the island of Ireland akin to that between France and Switzerland or Norway and Sweden. If that were to happen, we would have a major issue with the North-South movement of people and goods. In 2014, there were £3.63 billion of exports from the North of Ireland into the European Union. Is there any opportunity for the European Union to look positively at retaining the North of Ireland within the European Union? Is that a bargaining position the Government should be looking at to safeguard the common arrangements we already have?

It would certainly assist in the free movement of goods. If I were to drive home this evening post-Brexit, I would be asked for a passport or driving licence at the Border at Lifford. I would be asked exiting Lifford as well. Not only would this affect travel arrangements, but it would also have major implications for milk or food products going from Dublin to Donegal, for example. Has any work been done on this at official level or at Teagasc's level with its counterparts in the UK? Do the witnesses have any suggestions as to recommendations the committee could make in this regard in terms of the political bargaining or negotiations which will take place over the coming weeks and months?

Joe O'Reilly (Fine Gael)
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I invite Professor Boyle to begin to respond to some of the issues raised.

Professor Gerry Boyle:

I thank all the members for their comments and questions. I will preface my remarks by saying that some of the issues raised are of a political nature, and our organisation has no role in that regard. As the committee will understand, we very much occupy the science space, so to speak, and we are a little reticent to comment on some of the matters members have raised. Nonetheless, we will do our best.

Several issues were raised regarding the impact on teasing out the potential impact of an extreme scenario on small farmers and the question of market diversification, which is an issue for companies. Unfortunately, there is no doubt but that if we were to face the kind of shock that is possible, small farmers would be more severely affected. This is quite clear in two senses - they will take a bigger hit from any reduction in the prices they can get for their products and, more important, they will be adversely hit if the CAP budget is reduced because of their dependence on it. Sheep and cattle farmers are, as the committee will be aware, substantially dependent on CAP payments, so there is no doubt but that small farmers will be adversely affected.

A specific question about food fractionation was raised. This relates particularly to the dairy sector. Even we in Teagasc are continually surprised by the extraordinary product that milk is. To help the committee understand what we mean when we talk about fractionation, I will give an example. Many years ago, the farmer used to take the skimmed milk home for the pigs. I can certainly remember this. It was quite common. Not too long ago, whey was considered a waste product; it is now a critical part of the nutrition industry. The more we learn about products, the more we realise there are further opportunities to distil down their by-products - whether for standard milk production or cheese production processes - and recognise their value, and this will continue. When I talk about market diversification and market penetration, I emphasise that Irish companies are already hugely involved in these new markets. This is well known to the committee. What is interesting is that these markets present their own challenges in the scale of the operation required to successfully penetrate them. Substantial investment is required to penetrate them.

Regarding what the Government can do, the Government is already doing a lot by supporting industry through a variety of means to access such markets. There will have to be a substantial step-up in the investment and the timescale of that investment. All the commentary suggests that Brexit will play out over several years. In our view, at least as far as dealing with the challenges of market diversification is concerned, now is the time for a significant plan to be put in place to address this. The point Senator Daly made, that the only uncertainty is the uncertainty, is well taken. A private company cannot wait around for clarity; it must take decisions. This is where the risk arises. Senator Daly talked about cheddar cheese. It is not easy for a company to change its production model. To some extent, one can produce continental-type cheeses off a cheddar platform but, by and large, purpose-built investment will have to be put in place if that is the market diversification route that must be pursued. Some Irish companies are doing this. Dairygold, for example, now has an agreement with a Norwegian cheese producer to produce a completely different type of cheese that involves a different technology. There has been substantial investment by the Irish dairy processing sector on foot of the anticipated impact of the removal of quotas, but the sector is now faced with a further requirement for investment. I still think we have an opportunity to persuade the Chinese that cheddar is a delightful product, although our tastebuds would find some of the cheeses I have seen in the Chinese market utterly bizarre.

I will leave all the hard questions Senator Ó Domhnaill has raised about the bargaining position and so on to my colleague. We can make a big mistake in our sector by focusing on agrifood. It is probably not as high up on the UK agenda as it is on ours, and many other factors will impinge on that. As I said at the beginning, I think there would be universal agreement that we would like an outcome as close as possible to the current situation. The North-South issue is critical and, from a political perspective, if we could retain that single market, so to speak, on the island at least in the agrifood sector, that would be hugely positive. We have an extraordinary amount in common. Nonetheless, it is interesting that if one takes dairy as an example, there are vastly different systems of farming practised in the dairy sector North and South. We would like to think we have a more competitive and resilient model in the South but we need to collaborate on a much more extensive basis. Only yesterday, I had a discussion with my counterpart in Scotland on this broad theme. It is very early days yet, but I thought he made an interesting argument that one thing we have in common with the Scots, the Northern Irish to an extent and the French - but let us just take us, Northern Ireland and Scotland - is the development in agricultural terms of a sort of Celtic alliance in terms of our pasture systems and the sharing of our technology in a way we have not done before. One positive thing about Brexit is that it has brought us all to the point of considering the potential opportunities for collaboration.

I ask Dr. Hanrahan to deal with the difficult issues that were raised regarding tariffs and so on.

Dr. Kevin Hanrahan:

Senator O'Reilly asked about veterinary standards and the possibility they may diverge and the UK may adopt different standards.

Until they leave, they have to satisfy the acquisand there will be no difference. My own assessment is that the UK will be slow to move away from European standards given how high they are as a function of crises that occurred in the UK in the 1990s and early 2000s. There are grounds for guarded optimism that the UK will not pursue lower standards of regulation on the food, animal and veterinary standards side. One thing the UK will have to do, however, is develop its own capacity to licence businesses that export to the UK market in terms of veterinary standards. That is all currently taken care of by the EU. Britain will have to up its game radically in terms of having the capacity to do that on its own.

In terms of the tariff levels that might prevail post-Brexit, I note that the UK is a member of the WTO just like Ireland. While I am an economist and not a lawyer, my understanding is that when it leaves, the UK will inherit the EU's bindings at the WTO. Those set the maximum tariff rates the UK can apply to trade with other WTO members outside of a notified free trade agreement, or FTA. If, outside of an FTA, it wants to apply lower tariffs to a WTO member like Ireland, it must offer those lower tariffs to everybody. The cost to Irish agriculture is really in the loss of preferential access to the UK market. It is the access to the UK market that is protected by high tariffs, in effect. Even if we have free access to the UK market post-Brexit and there are no tariffs, it will also mean under WTO rules that no tariffs will apply to imports from the rest of the world as long as they meet the UK's standards of food safety, animal welfare and so on. That will be a much more challenging market than we are currently exporting very successfully to. Those countries and industries internationally with lower costs than Irish and European farmers face will have access in that scenario to the UK market and we will be severely challenged in that space. Recent research by Teagasc on the competitiveness of Irish agriculture underlines the point that while we are globally competitive in the dairy space due to our pasture-based production system, we are not as competitive at all in respect of cattle and sheep as countries like New Zealand, Australia, Brazil, Argentina and parts of North America. Obviously, we benefit from being beside Britain and there are costs to getting product from Brazil, for example, even if it meets all of the standards we require and which the British are likely to require. It is a long supply chain. However, technology will move on. Things we could not have imagined happening 20 years ago are now quite common in terms of fresh beef or lamb coming from the other side of the world onto what we consider our markets. To assume technological changes that shorten supply chains and distances will stop happening would be unwise.

The question was asked about us having a special status and what benefits that might deliver for the island of Ireland. There would be benefits if the trade flows North and South were unimpeded relative to where we are starting from right now. That must be set in the context, however, of the overall Ireland-UK trade. While the North of Ireland is important in a whole-economy context and for the agrifood space, it is - "dwarfed" might be the wrong word - much less important in terms of value at an economy level than the east-west flow. At a regional level in the Border area, the North-South dimension is perhaps way more important. For the industry as a whole, however, the east-west axis dominates the North-South in terms of the value of trade. While an arrangement which allows for free trade on the island of Ireland would mitigate the cost of Brexit for the agrifood sector, the cost of tariff or non-tariff barriers to trade on an east-west dimension will not be avoided. They will still be there and those are the ones which will really drive the large trade costs which could flow from a very hard Brexit. While we may end up in that position, we hope we do not.

Most commentary suggests the European Union and the United Kingdom want to avoid a relationship based on WTO rules. However, it seems likely from my perspective, albeit it may be beyond my competency in terms of the politics of it, that we will not be where we are currently. We are currently in the deepest imaginable free trade agreement, the Single Market. We will not be in the Single Market together and the UK may be outside the customs union. There will be additional non-tarriff costs to trade as well as possible tariff costs. Even if there are not WTO tariff levels, they may be somewhere between where we are now, which is none, or very low, but very low for every producer in the world. That will make the competitiveness challenge Irish agriculture already faces much more intense.

It is hard to know what tack the UK will take in terms of its agricultural policy and whether it will go back to a 1950s model. At that time, they were importing foodstuffs from their former colonies at, in effect, world prices, which was the disadvantage for Irish farmers. It was one of the great benefits of joining the EEC in 1973. If I had to bet, I suspect they will go some way towards it but not all the way because they will also want to protect their farmers' interests. In so far as they lower barriers to trade with non-EU countries, that will disadvantage UK farmers and also Irish farmers. Many of our standard commodities are as, if not more, competitive than those of the UK versus South American producers, but I expect that will be cold comfort.

On the budgetary issue, the dependence of Irish, UK and, in particular, Northern Irish farmers on the single farm payment and CAP. If Brexit had not happened, we would still be facing a challenge in that the next iteration of the CAP will see the newer member states from central and eastern Europe looking for a greater share of the budgetary pie that goes to agriculture. Other policy areas within the EU will also be looking for a bigger share of the overall EU budget and to see agriculture get a bit smaller. As such, we would be facing a challenge to maintain the levels of support Irish farmers get from CAP, even if Brexit was not an issue. Brexit doubly underlines that issue because of the size of the UK's net contribution to the EU budget. It places the onus on Irish civil servants and officials to do their normal brilliant work in that process. While we are often worried about what the outcome will be, Ireland has always done very well if history is any guide to that negotiation process at European level.

Joe O'Reilly (Fine Gael)
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I conclude this module by thanking the director of Teagasc, Professor Gerry Boyle, and Dr. Hanrahan for giving of their time to attend and for treating us to a very comprehensive presentation. They documented everything in considerable detail and threw considerable light on our proceedings. Their contributions will greatly assist us in coming up with our final report. It has been pertinent and very helpful material which we appreciate very much and for which we are deeply indebted.