Oireachtas Joint and Select Committees
Wednesday, 7 June 2017
Seanad Committee on the Withdrawal of the United Kingdom from the European Union
Engagement with All-Island Bodies
I welcome Ms Sharon McMahon and Mr. Barry Fox from the Loughs Agency, Mr. Brian Kavanagh from Horse Racing Ireland and Mr. John Comer and Mr. John Enright from the Irish Creamery Milk Suppliers Association, ICMSA. This will be a very interesting session with a range of issues to consider. We are particularly interested in hearing from the all-island bodies in respect of the following questions: What do the witnesses believe to be the greatest challenges to the areas for which their organisations are responsible? What are the potential solutions? What impacts do they expect on their organisational structures?
We were delighted that Mr. Comer and Mr. Enright were able to join this session. A couple of weeks ago, a number of delegates discussed the main areas in the agriculture sector. The segment represented by the ICMSA was, however, missing. We are grateful to them for filling in that gap today.
I draw the attention of witnesses to the fact that 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 the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
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.
I invite Mr. Kavanagh to make his opening statement. After the opening statements, we will open the floor to questions.
Mr. Brian Kavanagh:
I thank the Acting Chairman. I am grateful to the committee for the time and attention given to our quite considerable concerns.
It is no exaggeration to say the Irish and British racing and breeding industries are among the most integrated sectors of all sporting and commercial activities in these islands. Ireland relies heavily on Britain to buy our horses. The export of thoroughbreds is estimated to exceed €220 million per year, with 65% of the foals born in Ireland every year exported. Some 80% of these exports go to Britain. By any measure that is a substantial sector. When it comes to exporting our racehorses, especially those destined for the jump racing market, there is no replacement market for Britain. Unlike many other Brexit-hit sectors, we simply cannot adapt our product to suit new markets. Royal Ascot, Cheltenham, Aintree and Epsom cannot be replicated in another country.
As it stands, Britain relies heavily on Ireland to supply the racehorses it needs to operate its racing industry. Ireland and Britain have always been at one, and any uncoupling of our relationship would be very damaging to British racing and catastrophic to an Irish racing and breeding industry worth over €1 billion per year to the economy. In effect, we are twin industries, joined at the hip, with horses, trainers, and riders regularly moving between both jurisdictions. This was illustrated only last weekend when Aidan O'Brien's Tipperary-trained horse won the Epsom derby ridden by young Pádraig Beggy from Dunboyne in County Meath. It was the seventh Irish-trained winner of the Epsom derby in the last ten years.
With Britain overwhelmingly our main market, the sector here is considerably exposed in the event of a hard Brexit. Last week we attended a meeting with representatives from the British Horseracing Authority and France Galop in London and found, reassuringly perhaps, that our fears are shared by our international counterparts. The key issue is the free movement of racehorses. This has been secured between Ireland, Britain and France since the early 1970s and has underpinned the racing and breeding industries in the three countries for the last 50 years. It is a tripartite agreement between the three ministries of agriculture that works exceptionally well, and it is essential that the status quoremains. Once a horse is registered with a racing authority in one of the three countries, it is entitled to move freely between them without need for veterinary examination or inspection. The horse racing industry has a reputation at EU level for the highest animal welfare standards, but any restriction to the free movement of horses challenges those standards.
Horses are not commodities like agriculture produce and cannot wait at ports or borders. There are an estimated 10,000 horse movements between Britain and Ireland a year, with a weekly average of 200 horse movements. The implications of a hard border would be severe for both people and horses. Nobody in the racing industries in Ireland, Britain or France wants to face the logistical challenge of moving horses through border controls and checkpoints. Thoroughbreds are highly sensitive animals, bred for centuries for their flight response, and horses in training are young athletes at the peak of their fitness. Any Brexit-induced delays that increase time stuck in horse boxes in queues at ports could prove extremely difficult for trainers and their staff to manage. This would have an impact on the horse's ability to perform to its maximum potential on the racetrack.
Irish horsemen and women have been world leaders in racing and bloodstock for decades. There is no other sport in which we have excelled at such a high level for so long. In Cheltenham this year, there were a record 19 Irish-trained winners. More than two in three races were won by horses trained in Ireland. At Royal Ascot last year, one in three races were won by Irish-trained horses, and almost two in three of the winners were foaled in Ireland. Proximity and ease of access to racing in the UK is a key element in these achievements.
While the sport of horse racing is one of Ireland’s greatest and most enduring pastimes, it is also the shop window for a key agriculture industry with a huge rural reach, which has a proven ability to provide rural employment and inward investment in every nook and cranny of the country. It is estimated that 14,000 people are employed in our industry. It generates economic activity of up to €1 billion per year, as I said. The bloodstock industry needs a shop window, and whether it is Cheltenham, Aintree, Epsom or Royal Ascot, at many key points of the year that shop window is in Britain. Britain hosts some of the most prestigious horse races in the world and is a proving ground for the Irish racing industry. These meetings are currently easily accessible to Irish trainers, owners and horses. It is also a matter of continuing to attract foreign direct investment. The ready and easy access to British racing is attractive to overseas investors to base their bloodstock in Ireland. Any impediment to that access would be an obvious disincentive to owners keeping their horses in Ireland to be trained or bred, nor can we rule out the future possibility of Britain introducing incentives for its own industry over time.
Our industry enjoys a lot of natural advantages of climate and soil structure, as well as a natural affinity for horses among the people, but Brexit does expose our geographical vulnerabilities. The east-west border provides its own set of concerns, but here on this island, we have major worries over any hard Border between North and South. I understand that is the focus of the committee today. Horse racing and breeding is essentially an all-island activity. Racing has always been operated on a 32-county basis. Foals born in County Tyrone in Northern Ireland carry the IRE suffix after their name in the same way a foal born in Cork or Wexford does.
Two of Ireland’s 26 racecourses are in Northern Ireland and would be located outside the EU post-Brexit. Downpatrick and Down Royal are two highly progressive and popular racecourses and although located in the North, they are very much part of the Irish racing industry.
To emphasise just how much they are an essential part of the fabric of Irish racing, nine out of ten horses racing at those tracks are trained in the Republic of Ireland. Down Royal and Downpatrick receive capital development grants and prize money support from Horse Racing Ireland and the racing industry in Northern Ireland is unanimous in its wish to remain part of the infrastructure here. From an administrative perspective, the complications increase when one considers that all trainers in Northern Ireland are licensed by the Irish Turf Club and races are staged under Turf Club rules. As I stated, foals born in Northern Ireland carry the (IRE) suffix rather than (GB).
Anything other than the current integration and ease of movement for people and horses will have significant negative consequences for Ireland – be that between North and South of Ireland, or west to east between Ireland and Britain. We seek the committee's support to protect what is a significant indigenous industry and Mr. Mullin and I will be happy to address any questions it may have.
I thank Mr. Kavanagh, whose presentation exemplifies one of the problems with Brexit. It is an industry that most people in the country know about but very few are aware of the impact that Brexit would have on it.
Mrs. Sharon McMahon:
On behalf of the Loughs Agency, I thank the committee for giving us the opportunity to present to it. I am accompanied by Mr. Barry Fox, director of aquaculture and shellfisheries, who is based in Carlingford, and Dr. Patrick Boylan, senior biologist, based in our headquarters in Prehen. I realise the committee has a long day planned and therefore I will keep my comments brief. If it requires any further information regarding the work of the agency or if it wishes to visit us as part of its work, we would be delighted to welcome members to our headquarters on the banks of the Foyle or our offices on the shores of Carlingford Lough. The committee may be interested to know our unique legislation, which led to the creation of the Loughs Agency, predates the accession of either the UK or Ireland to the European Union. The Foyle Fisheries Acts of 1952 were strengthened by the Good Friday Agreement, whereby further functions were given to the agency.
Unfortunately time does not permit me today to describe the work of the Loughs Agency in detail. The committee might be glad to hear that. However, I would like to highlight the remit of the agency, which is to conserve, protect, manage, promote and develop the inland fisheries, aquaculture matters and marine resources, including marine tourism, of the Foyle and Carlingford areas for commercial and recreational purposes. We manage over 3,600 km of rivers and are responsible for both sea loughs, including an area extending 12 miles out to sea from Lough Foyle, stretching from Malin Head in Donegal to Downhill in Northern Ireland. We are funded 50:50 North and South and we operate under agreed governance and statutory obligations through the North-South Ministerial Council. We employ staff both in the North and the South. We work to two sets of employment laws and tax regimes. Our board has 12 members, comprising six southern appointees and six northern appointees, all working together for the success of the organisation. We are truly are a cross-Border body in everything we do.
In addition we are involved in many partnerships locally, nationally, and internationally, and we work on an all-island approach within our field of expertise. The agency has relationships across many sectoral pillars with councils, community groups, the private sector and other statutory agencies on both sides of the Border. This is how we operate on a daily basis and it is our core business to work across the two jurisdictions day in and day out. For example the agency’s fishery protection staff have the power to act in both jurisdictions, allowing them to pursue prosecutions on the basis of domicile of the offender, irrespective of the jurisdiction in which the offence occurred, within our catchment areas.
This experiment in cross-Border co-operation and goodwill, which commenced in 1952, has stood the test of time and is still in use today and will be post-Brexit. Our uniqueness, as indicated, exists primarily because fish, poachers and pollution do not recognise borders. As a consequence, we must highlight that it is imperative that we continue to protect our natural resources in the Border counties. At this point we are confident nothing will change in terms of our legislative framework post-Brexit, although that said, the UK's withdrawal from the EU is potentially one of the biggest threats to the environment in the medium to long term. Before Brexit the UK transposed EU directives into national legislation but we are unsure how this will work in the future. We are concerned that as time passes and amendments are made to EU and UK legislation, both will fall out of sync. Environmentally speaking, this is quite troubling. Depending on the eventual deal agreed, the UK may have to abide by at least some EU legislation, including environmental directives.
Over the years the Agency has delivered a number of INTERREG-funded projects. IBIS was a hugely successful project between Ireland, Northern Ireland and Scotland and this project has made a significant contribution to the region's responsibilities under the water framework directive and the habitats directive. EU funding has contributed to cross-Border infrastructure projects at Malin Head, Benone beach, and the Foyle marina in Derry-Londonderry. We are conscious of the fact that if funded programmes are no longer available, the tourism sector in the Border areas may be negatively affected. Northern Ireland and Ireland's Border region will require a focused solution. Ms Gina McIntyre, the chief executive officer of the Special EU Programmes Body, SEUPB, in her statement to the committee referred to the fact that this is not something new in Europe, as precedents exist where non-EU countries partner EU countries. We are heartened by this and will be in contact with SEUPB to explore these issues further.
As members might imagine marine tourism-based activities are a key aspect of our work now and will continue post-Brexit. The committee may not be aware, unless there are some active anglers in the room, that we have a great opportunity in the Border corridors to develop some of the least known, undiscovered and yet best sea, coarse, match and salmon fishing in Europe. This could bring much-needed tourism and economic development to local businesses and communities while addressing unemployment and social deprivation in the Border counties. We are exploring the need to have a dedicated cross-Border intervention programme that will tackle some of the existing issues and might help to mitigate against future issues, as they arise. We are already working on many projects, Dr. Boylan can provide further information on if the committee so requires.It is essential we continue to promote the "island of Ireland" as a destination for world class marine and freshwater tourism, including angling. We have a joint initiative with Inland Fisheries Ireland and the Department of Agriculture, Environment and Rural Affairs inland fisheries division to promote angling on an all-island basis aboard. We go to events abroad under the banner of angling Ireland rather than the Loughs Agency; essentially, the three bodies go as one. This work will continue to be developed post-Brexit.
Our plan is to continue to build on our past successes. We have been working cross-Border since 1952 and post-Brexit this will not change. The agency will proactively continue to forge strong relationships at international, regional and local levels, reminding Government agencies that we are the delivery mechanism for many diverse issues from marine tourism, angling development, environmental conservation and protection and many more matters that require transboundary co-operation on the island of Ireland.At this time there are many unknowns and uncertainty appears to be the biggest threat to the Border regions. The all-island dialogue on Brexit and other such events are bringing together local and central government agencies, the private sector and community groups. They are providing a great forum for debate. These must continue and the Loughs Agency has welcomed the chance to take part in these dialogues including the invitation to attend this meeting with the select committee.
We trust members have found this presentation informative and helpful in setting out our concerns and solutions to the implications of Brexit. As a closing point may I reiterate the fact that fish, poachers and pollution do not recognise borders; poachers and pollution will thrive on ineffective legislation, chaos and inertia. The Loughs Agency is committed to its core work, as it has been since 1952, and this will continue post-Brexit. I thank the Acting Chairman and members for listening and we welcome questions they may have.
Mr. John Comer:
I thank the committee for giving me the opportunity to address it. It is extremely important that elected representatives of people hear from those who will be directly affected in a negative way by the decision of the UK to leave the European Union. It is valuable to have the opportunity to eyeball those people in order that we can carry a message back to ordinary civil society and our members that there are people in charge, they have a plan and inertia will not become apparent in the vacuum as we wait for the trade deal.
That is of fundamental importance. It is possible that there will be some repetition as people suggest what should be done and speak about the opportunities available. While I do not intend to read through the document we have submitted to the committee, I will verbalise some aspects of it.
The Acting Chairman has mentioned that other farm bodies have attended meetings of this committee. I will set out the perspective of the ICMSA, which represents a large body of the product produced on this island that needs to be exported from this island. When milk quotas came to an end in April 2014, we were producing 5.5 billion litres of milk. That has since increased to over 7 billion litres. The vast bulk of our milk exports go to the UK, which is the fifth largest economy in the world and the second largest economy in Europe.
I have come from a conference in the Mansion House this morning at which the future of Europe was discussed. The UK must be part of Europe, even if it is leaving the EU. Any negative effect of Brexit on trade will have a pronounced negative effect on rural communities. Brexit will reach into every parish in Ireland. That is why it is important to point out the significance of building alliances. This is a major point. I appreciate that the Government is doing its best in this regard. We must take every opportunity to reiterate the importance of building alliances with the powerbrokers in Europe with the ultimate aim of achieving a pragmatic trade agreement that caters for the free movement of goods to the UK without tariffs. That is ultimately what this is about.
I remind the committee that 60% of the cheddar produced on this island goes to the UK. Bord Bia needs to be funded. If it had all the luck and all the money in the world - even if it had magic powers - it would not be able to find new markets for such quantities of cheddar. Over 100,000 tonnes of cheddar products leave this island each year to be used by consumers in the UK. We face a phenomenal challenge in this area.
We need to build an alliance with the main powerbrokers in Europe, including Holland, France, Germany, Spain and Italy. Holland has over €6 billion of trade with the UK. Ireland is second in this league table. The equivalent figures for France, Germany and Spain are €4.5 billion, €4.75 billion and €3.5 billion, respectively. If we can work with such countries to emphasise that a good deal for the UK is also a good deal for the EU, we will go a long way towards alleviating the potential negative impact of other countries that are trying to make an example of the UK and making sure there is no contagion.
I would also like to speak about currency volatility. Although the currency is relatively stable at present, a small shift would have a huge impact at primary production level. I think we need to plan for such a shift. The Government needs to put policies in place at national level to mitigate such an eventuality. We strongly suggest that a farm management deposit scheme should be facilitated by our elected representatives. They should build momentum with the Government so that this single measure is put in place as a tangible tool that can be referenced as something to mitigate the pronounced volatility that has come into the agritrade sector over the past three or four years, particularly since the Brexit referendum.
Bord Bia and other marketing agencies need to be strengthened so that markets can be diversified. There also needs to be an examination of what the potential outcomes will be. This is a fundamental point. How much will we need to invest in the UK? Will such investment be a waste of money? Can we invest there? We need to be able to make conscious decisions on a commercial basis that it is worthwhile to spend money in the UK now. I suggest politics has a responsibility to minimise the vacuum that currently exists in this regard. Politicians should try to give a steer and a direction to all our industries so that they know where the smart money should go. I know it is not simple.
I would like to comment on the trading relationship. If there is no agreement, the WTO arrangements will come into effect by default. As an imperative, we need to take part in negotiations on a transitional agreement along with the Brexit talks. If we do not take this approach, environmental and production standards will get lost.
I strongly believe one aspect of the trade deals makes no sense. Under the CETA trade deal that was agreed, 45,000 tonnes of beef will come into a Union of 28 member states. Even though we are about to lose 64 million consumers, the trade deal that provides for tariff-free tonnage is coming in just the same. Negotiators are negotiating another Mercosur trade deal with the South American bloc. We need to be cognisant that this deal incorporates 64 million consumers who will not be in the EU when it comes into force. Politicians need to suggest forcefully that the dynamic needs to change.
Every elected representative should reinforce the point that an adequate Common Agricultural Policy budget is needed to facilitate the family farm structure across Europe of which we are all so proud and which consumers say they want. By the time this structure disappears, it will be too late for consumers to do anything about it. There is a responsibility on us to uphold this imperative.
The point made by previous speakers about the possibility of a hard Border on this island has implications at local level. There are dairy farmers along the Border who will have cows grazing in the top paddock, which will be in the EU, and other cows grazing in the bottom paddock, which will be in a third country. The physical implications of that are unthinkable. Milk trucks make approximately 32,000 journeys across the Border annually to facilitate the processing of 26% of Northern Ireland's milk in the Republic. Some 11,543 cattle have gone across the Border so far this year.
The ICMSA has been referred to as a representative body for the dairy sector. I want to put the record straight on that one. There are 1.2 million dairy cows in the country. That is more than the number of beef cows. They all end up in the beef market. They are ultimately processed as beef. Therefore, we represent over half of those involved in beef production in this country also.
I did not bore the committee with the statistics because members are very familiar with them. I make no apologies for impressing on everyone here the need to mitigate the implications of Brexit. I will not get tired of making the point that as far as I can see, Brexit has no positives for rural communities or parishes. It might have the odd positive for urban areas, but not for rural communities. I thank the committee. I will be happy to take questions from members and interact with them.
I thank the delegates. I will begin by responding to Mr. Comer. We are all singing off the same hymn sheet. This thing was imposed on us. In fulfilling our duty to form a report, we must look at every inevitable outcome. If we could write a wish list for the report setting out everything we want, it would be in accordance with everything Mr. Comer has said. I agree fully with it all. Unfortunately, there are two sides at the table when negotiations are taking place. Ireland is just one of the 27 member states on one side of the table. We will not know until Friday whether it is Theresa May who is at the other side of the table.
I would like to pre-empt every question I am about to ask by saying that like the delegates, we are hoping for the best. I mention that in case I am portraying this committee as the ultimate in pessimism. We want the best outcome, but we have to plan for the worst-case scenario. I would like to tease out with the witnesses a few issues that might arise if the worst-case scenario comes to pass.
The all-island bodies are unique. It is appropriate that the ICMSA is represented here today, rather than at the meeting which was attended by representatives of the other farming bodies, because the milk sector has more of an all-island dimension than other parts of the farming community. As Mr. Comer said, millions of litres of milk cross the Border each day. Milk is brought from the South to be processed in the North and vice versa. Country of origin issues, etc., will arise if we end up with the worst-case scenario of a very hard Border. What contingency plans have the all-island bodies put together collectively to cope with such a scenario?
Mr. Kavanagh knows where I stand on horse racing.
It is a passion and love of mine. However, when the real negotiations start, while we are joined at the hip with France and the United Kingdom and those of us into the industry and the sport recognise its economic value, how high up the pecking order does Mr. Kavanagh think it will be in view of the fact that the vast majority see it as a sport? They do not see the economic aspect or know the figures involved. We know about the tripartite arrangement with the French and the British, but from where is the British Horseracing Authority, BHA, coming? Is it as big a priority for it? I know that it is for its members personally. However, is Mr. Kavanagh getting feedback from them at to where in the pecking order of priorities on the UK side it will slot in? In the worst case scenario, if we end up with a hard Brexit and a hard border, from the viewpoint of Downpatrick and Down Royal racecourses, could he envisage - I know that he will not want to see it, but the fact is that Irish money is going there to be used as prize money and provide grants - these two racecourses ending up within the remit of the British Horseracing Authority? While some side arrangement may be made, they may ultimately have to race under BHA rules. For example, the whip rule is different. From that point of view, I am trying to tease out where we are and where Horse Racing Ireland would be as an organisation in a worst case scenario. We are all hoping for the best case scenario.
With regard to fisheries, environmental standards were mentioned. Brexit was sold in the United Kingdom in a lot of quarters. Money aside, there were fantastical promises made about where the money being sent to the European Union would be invested. One of the key sales pitches in the electoral manifestos at the time was that the United Kingdom would not have to keep European standards any more. We know that that was not thought through. Let it be with tariffs or free trade, if it intends to export product to the European Union, it will not be accepted unless it maintains standards. That has been said. If there is a query or standards are questioned, the worse part will be determining where one should go if there are two jurisdictions. There will be two governing bodies. If there is a pollution problem on a river that transcends the Border and it started in the North, one will have to go to one agency. However, if it is flowing downstream, one will have to go to another. If the delegates could write the agreement, how would they foresee a solution to the monitoring problem on the whole island.
To tease this out, with a view to making recommendations in our final report, we had a number of groups here who touted the idea of special status for Northern Ireland. That would be a big help for the three organisations represented which are working on an all-island basis. It would eliminate the prospect of a hard border and we would have an east-west border. While that might solve a lot of problems from the point of view of racing, as well as of water management and fisheries, we would then have a situation where Northern Ireland, although we might have the same status, would still be part of the United Kingdom. The farmer south of the Border would be in the European Union. If the deal goes ahead, eventually the United Kingdom will be out of the CAP; therefore, one farmer would be within the CAP and the other outside it. In a worse case scenario there would be a WTO tariff on product from Monaghan, but in Fermanagh it would be a UK product. In the agricultural model how much thought has been put into what a lot of people are touting as a bloody great day were we to achieve all-island status. It is only my opinion - I am teasing it out for the purposes of our report - but in terms of the farming model, in particular, it would open a whole new can of worms and be a nightmare. I would like to hear the delegates' opinions.
As I stated, we are all on the same page. I am with the delegates 100%, but, unfortunately, we are in the position in which we find ourselves and it was not of our making but of the United Kingdom's making. If the negotiations go sour, we must have a contingency plan for the worse case scenario.
I thank the delegates for their presentations. My question is for the delegates from the Loughs Agency. To understand how things work now in taking prosecutions for poaching and pollution, where are they pursued? How is that matter decided? Is a line drawn on a map of the lough? Does the agency decide whether prosecutions will be taken in courts in Northern Ireland or the Republic of Ireland? How is that established? Is there fluidity in that regard? Can the agency decide where cases should be prosecuted?
I have a question for Mr. Comer on the low interest agri-cash flow support loan scheme which was introduced by the Government. There was €150 million available and in the space of 22 days the scheme was oversubscribed. Would the ICMSA consider repeating it as part of a solution? I would appreciate some feedback from Mr. Comer.
On the CAP, as Mr. Comer pointed out, there will be less money available because Britain will be outside the European Union. How will this impact on the dairy sector? From the point of view of farm payments, there will be less money in the pot. It seems there will be less money to go around. Has Mr. Comer's organisation evaluated the possible impact? What is his organisation suggesting? He spoke about the farm management deposit scheme as a buffer to prevent volatility in the commodity price. Perhaps he might give us his views on the matter.
Mr. Comer did not mention the farmer who is in a weaker position in the chain of supply. Farmers are price takers; they do not set the price. Whether it be the multiple retailers or international markets, the farmer is the vulnerable person. We know that in milk prices for a while farmers were challenged to meet the actual cost of producing milk as the price was on the floor. Mr. Comer did not mention it in his presentation, but there have been suggestions from different sources about how the relatively weak position of farmers could be addressed and how they could be supported. Not only is it demoralising but it is also financially unsustainable to be in that position.
I have one other question which I inadvertently forgot. It is targeted more at the Loughs Agency and Mr. Kavanagh from Horse Racing Ireland. The delegates from the Loughs Agency mentioned selling the island on an all-island basis for angling. This also relates to Mr. Kavanagh reference to the Irish champions weekend and other such events. Are they noticing any scepticism or negativity? Are people asking more questions about where they will be one year down the line? Are they noticing - I hope not - a drop-off? We had representatives of Tourism Ireland here who said people thought about and started to plann holidays and trips one year in advance. None of us knows where we will be one year down the line.
I will wrap up the questions, if that is okay. I will start with the Loughs Agency. The legislation is quite dated. It dates back to 1952. There is underpinning in the Good Friday Agreement. Is the Loughs Agency satisfied that the legislation is robust enough to meet its needs now? It is funded on a 50:50 basis. In the event that there is a hard Brexit and the funding dries up or the balance of funding changes, does the agency have contingency plans in place?
My final question which has been adverted to by some of my colleagues relates to the differing standards that may apply post-Brexit. I have the same question for Mr. Comer and Mr. Kavanagh. What plans have they put in place for market diversification?
In response to Mr. Comer, in particular, I am mindful of the cheese industry in Ireland and of cheddar being a major part of that. It has a tiny market, albeit of 64 million people but that is a tiny market in the global scheme of things. There is no alternative I know of for cheddar, which is a problem. Having been at Bord Bia's Bloom showcase this weekend and having watched some of the artisan cheese producers in this country, they are to be commended. Some of the cheeses on sale there at the weekend and some of the agricultural produce in general was fantastic. Again, however, I worry about diversification.
On the issue of diversification in the horse racing industry, horse racing is huge in Australia, in the Arab states and in the United States. Why are we relying solely on the UK for the export of billions of euro worth of race horses?
The function of this committee is to seek out solutions. In every meeting in which I have been involved, I have heard the problems reiterated over and over again. In every European-based meeting in which I have been involved, I have been reassured, as late as at the COSAC meeting in Malta last week. At the end of his speech, Mr. Barnier singled out Ireland and the problems associated with Ireland and gave reassurances that every step would be taken to maintain the current situation. Professor Hübner, Chairman of the European Parliament's Committee on Constitutional Affairs, made exactly the same point at the end of her speech.
We constantly hear in this country that the British are favourable to the Irish situation and the British constantly say that they are favourable. I want to ask the delegates if they are confident that with all of this talk, things will work out on the night? Is there something we are missing out on or are not doing? That applies to all three agencies represented. I have a particular fear for the agriculture industry and, as of today, for the horse racing industry I had not previously considered. I am a city boy, for me milk comes in cartons. At the end of the day, however, when I look at the impact on the witnesses' markets and produce, I am told there is no real alternative market for our beef and that the Chinese market is not really there for it. We seem to have failed to capture the Chinese market for milk in the same way that the Latvians have, for instance. That concerns me. I am interested in the delegates' views.
I will finish with the Loughs Agency. How does the agency see the Good Friday Agreement providing a vehicle through which it might get more leverage to get what it wants out of Brexit negotiations? I thank the delegates.
Mr. Brian Kavanagh:
There is a lot in that and many very good points. I will start with the Acting Chairman's point about dependence on the UK. We are a little like the beef and cheddar markets in that almost 50% of our production of thoroughbred horses is for what is called national hunt racing, or jump racing. While the Senator is right that racing is a worldwide activity, jump racing to any significant degree is generally confined to Britain, Ireland and France. That is the difficulty we have in recreating that market. It is an area we are particularly concerned about because while the WTO tariffs do not apply to animals sold for breeding purposes, which is some comfort for our bloodstock sector, they do apply to animals that are sold for purposes other than breeding, that is, geldings. These go to the jumps market in Britain, which is a significant market and we have a significant dependence.
As for the flat produce, which is the more global activity, Ireland has been very good at exploiting international markets and we need to do more in that respect. In recent years the Australian market has opened up for horses that are bred to run over longer distances, that is, stayers. The biggest race in Australia on the flat is the Melbourne Cup and four years ago, the first ten horses to finish in that race were bred in Ireland; therefore, there is a significant export trade. It is a competitive market, however, between France, New Zealand, Australia, ourselves and other countries. We need to work significantly in that area.
In response to Senator Paul Daly's question about what we are and could be doing, the point made by Mr. Comer earlier is very valid. We have to make alliances beyond Britain and we have been doing this. We have to make alliances in Europe at both political and, from our point of view, business level. We have had discussions with the thee principal racing authorities in Europe: Britain, France and Ireland. I am pleased to say their interests are aligned. Further than that, we have engaged with all of the other racing authorities in 28 European and Mediterranean countries to ensure they are supportive of our desire to retain as much of the status quo as we can. While racing may not be a big industry in Austria or Belgium, they have the same effectiveness at EU level as Britain, France or Germany or some of the bigger countries. We have engaged with the racing authorities and they are writing to their Commissioners and Ministries for Agriculture about the requirement to maintain the status quo.
The system that has developed in the thoroughbred sector is very sophisticated and has been in place for 50 or 60 years. There is full identification of animals and very strict measures in the areas of full disease control and prevention, operated by the host racing and breeding authorities. All animals are registered in a registered stud book. They all have similar documentation between countries. The status quois very good, particularly between the three countries that have this tripartite agreement, which means that if a horse is racing in France, it can just turn up at the port or airport and travel. That is a key area of activity for us and is our main priority. The free movement of animals needs to continue, if only from a welfare point of view, quite apart from any commercial aspects.
As Mr. Comer said, we do not see any positives in Brexit for our sector. One possible lifeline is the Northern Ireland link and the fact that racing is run on a Thirty-two county basis. As we operate a single stud book between Ireland and Britain, it is very difficult to unravel all of that. It is practically next to impossible and it would be stupid to unravel something that works very well. We have full alignment from the Northern Ireland authorities on racing, breeding and racecourses and they want the status quoto remain. They are fully aligned to our interests, as indeed are the British authorities. They do not want to get involved in operating horse racing in Northern Ireland. I hope that we can find some sort of solution in that area. The other area is the whole question of tariffs. As I mentioned earlier, we want a tariff-free trade to continue to operate between Britain and ourselves. There is some comfort on the breeding animals side of things.
Senator Paul Daly asked about tourism. We have not seen any negative effect so far. Our last big race meeting was Punchestown, which is of great attraction to international visitors. It had a record number of UK visitors. That is not to say that as the summer season unfolds there will not be an impact from the fact that it is now more expensive for British people to come and spend time in Ireland.
Overall, sometimes people view racing as the sport of kings and something of a marginal activity. In Ireland, however, through natural advantages and Government support down through the years, we have been able to create a significant rural industry. There is significant employment in rural economies where there might be no alternative employment. Alan Dukes did a study some years ago where he took four towns around the country, one for example being Bagenalstown in County Carlow. Within a ten-mile radius of Bagenalstown there were 450 full-time jobs in the horse racing and breeding industry, be they in feed suppliers, vets, trainers or stud farms. If someone created a factory with 450 people employed in Bagenalstown it would have a significant impact. This is largely fuelled by international investment. People invest in Ireland because our soil structure is good and our people are good with horses. We ask the politicians to ensure that the voice of this industry is heard in the Brexit debate and that it is adequately protected.
As I said, we are making the alliances we can with our international counterparts and we have confidence that our politicians and negotiators in Europe who are very skilled in this area, would also take account of something that is a great Irish success story and needs to be protected.
Some comfort can be taken from the fact that the British and French authorities are aligned in our interest. We are preparing a joint document to go to the European Commission on protection of the tripartite status of free movement of animals. However, it is a major worry for us. It is uncertainty that causes most concern to people.
I will interject for a moment, if I may. One of the echoes going around in my head is what I have been told in Europe by European politicians and bureaucrats. They are all saying the same thing, "Please bring me a solution." I ask the witnesses to comment on this. Does Irish politics have a solution to offer or are Irish politicians looking to the witnesses to give us a solution we can put in the bag and take over to Brussels with us?
Mr. Brian Kavanagh:
I think it is a bit of both. I think we can give politicians the solution and more importantly, we with our British and French counterparts can give it to them. Politicians can go to Mr. Barnier with something that has the backing of three major players in the sector. As I said, our diplomats historically have been very skilled at getting the case across.
A huge amount of work has been done in our sector to develop a very sophisticated system whereby horses and people move freely between the various economies. It is a matter of routine. Half the jockeys taking part in any race meeting in Britain today will be Irish jockeys. Some of them are based here and travel over to ride with others permanently living in Britain and racing there.
On Friday in Portlaoise we will have a meeting with the Minister for Agriculture, Food and the Marine to have a sectoral discussion on the impact of Brexit on the equine sector. We are working with the British Horseracing Authority and France Galop with a view to preparing a single document outlining the preferred wish not just of Ireland but of Britain, France and the rest of Europe. I am told that Mr. Barnier is a man who wants solutions, as opposed to being given a list of whinges, moans and problems. I believe the solution is there largely with the status quo. The status of the UK within the customs union is a key issue in that respect. I suppose that will not be decided until after the outcome of the election on Thursday and when the negotiations start.
Mrs. Sharon McMahon:
I will start with the Acting Chairman's question on legislation. The Acting Chairman and other members of the committee have raised some relevant and in-depth questions on which we are working. To understand how we operate it is necessary to understand our legislation. While one might think that legislation from 1952 is dated, it has worked for 65 years. It was very forward-thinking at the time that the two Governments could sit down and come up with an organisation, the Foyle Fisheries Commission, to manage Lough Foyle, which was quite challenging at the time. While our legislation is dated, we constantly update it through by-laws. We work with the Attorney General in the South and with the Departmental Solicitor's Office in the North. Our legislation was further strengthened by the Good Friday Agreement, which conferred other functions on the agency that made us even stronger.
I do not see our legislation as negative. I see it as very positive. For example, we can prosecute cross-Border for an offence that has taken place in Lifford on the River Finn where the offender is domiciled in Strabane. We can prosecute him in Strabane even though the offence occurred in Ireland. We have had that unique legislation for 65 years. It has worked through the Troubles and still works very well today. It was very forward-thinking at the time and is amazing legislation, if one takes the time to look at it. We operate every day cross-Border; it is what we do. We are not naïve; we realise there will be challenges but we truly believe in our legislation. It has stood the test of time and we believe it will stand the test of time even after Brexit.
I will also address the question on the Good Friday Agreement. The Agreement conferred other functions on the agency, including the development of marine tourism and angling. The Agreement leaves us in a very strong position. We can be that vehicle to strengthen this even further in the Border corridors. If we have the funding from both Governments and the support, we could do much more work on the Border corridors.
We are funded on a 50:50 basis through grant-in-aid from the two Governments. That has been the case since 1952 and we have always been funded. We bid for our money like any other Government agency and we get it on a 50:50 basis. The EU funding will be a considerable loss to us. Our current headquarters was built using EU money. The IBIS project I mentioned and several other infrastructure projects used EU money. We are now looking at other streams of funding, including the heritage lottery fund in the UK. We are working with other local government agencies, such as councils, to develop projects. That is not just in the tourism industry but also in the field of science in which we work. We are positive. We realise there will be challenges but we are continually looking at contingency plans and a way forward for the agency.
To revert to the legislation, poachers and polluters do not recognise any borders. That was seen in 1952 and Brexit will not stop that in the future. The two Governments have worked together. The co-operation that existed in 1952 continues today in our day-to-day operations. We have quite a close relationship with the two Departments, North and South, based on the two sets of governance we work to and our statutory obligations. We work with two Governments, the two sponsoring Departments and the North-South Ministerial Council to deliver our daily operations. Working cross-Border is second nature. We see the Good Friday Agreement as only going from strength to strength after Brexit. However, we will continually plan for the future.
I will ask Mr. Fox, our director of aquaculture and shellfisheries, and Dr. Boylan to answer the questions on environmental law and monitoring.
Mr. Barry Fox:
With regard to complying with EU directives and obviously the cross-Border nature of the Loughs Agency, post-Brexit there will be no compliance with EU directives from the UK. While it is an unknown, our belief is that if the UK is to access the Single Market, it will have to comply with specifics from the directives. On the environmental side, we believe that should apply in the longer term.
We have not seen a drop in angling tourism. Ireland as a whole has a unique product to offer. We have some of the best coarse, game and sea angling in the world. While Brexit may create an issue for exports etc., I do not see it having a major impact on tourism and bringing people into Ireland.
I will let Dr. Boylan answer some further questions on potential changes in environmental law post-Brexit.
Dr. Patrick Boylan:
One of the questions was on the differing standards with regard to EU directives. This is a concern to us in the agency and probably to the wider environmental organisations, particularly as it relates to the habitats directive and the water framework directive. We all work towards attaining good ecological status.
The question post-Brexit is how that will work. We really do not know how it will work out, particularly if both of these directives have been transposed into national legislation. They are on the Statute Book in both the United Kingdom and Ireland but as time moves on and if the United Kingdom and European Union make changes to their legislation, they will go out of sync. How will that work? It is unknown at present. We are on various committees in Northern Ireland and Ireland with regard to the workings of the EU directives. At present, it is just business as usual. That is as much as we know. It is not as if we had a crystal ball.
Mr. John Comer:
I note with interest that the committee is seeking specifics and specific solutions. If only it were that simple. I must revert to the questions of what we can do and what we can do best. Senator Paul Daly referred to these. About two weeks ago, for example, Monsieur Hillairet, a significant agricultural representative in Europe, was suggesting France should insist on a hard border between the European Union and Ireland, effectively. What we need to do is set the record straight with these people. We counteracted that as an organisation and we must ensure that kind of sentiment does not get any chance to graft at all. To return to what Senator Paul Daly was saying, we have got to build the alliances and put out a big umbrella of diplomacy. We have got to try to come up with a final solution in terms of a trade deal that represents the status quo. I believe deep down that is also what the United Kingdom really wants. People in the United Kingdom representing the population got a result at the ballot box but they know that economically, socially and environmentally, they were better off where they were. It is a matter of not backing anybody into a corner and making sure that we come up with creative language to effect a deal that remains closely with the status quo. Even with a soft Border, there is no business for a low-margin business. In this regard, consider all those lorry journeys over and back. There is no business, even with a paper trail, and it imposes a cost on the industry, unless the consumer pays. I do not believe that is going to happen.
The Acting Chairman asked whether we are good at pointing out the uniqueness of Ireland. We need to move on to similarities, the common part of the European Union and why we should all be in this together to make a good deal for all the Union. We have nuances and differences but we need to strike a deal together.
I was asked specifically about cheese. There is no other market. The percentage is 60%, or 108,000 tonnes of cheddar, a massive amount. Simply put, carnage would be created in rural Ireland in terms of what was referred to by my colleague, Mr. Brian Kavanagh, namely, employment in the areas that are regional and outside the Pale. There is no way to dress it up and there is no point in putting forward propositions with solutions in this regard because there is none; it is simple. We have to face up to that, and people have to know the enormous impact and fallout we will experience unless we get a tariff-free arrangement. The solution, of course, is tariff-free access to the UK market. As I was saying in my presentation, even were Ms Tara McCarthy, the CEO of Bord Bia, to be given magic juice or serendipity juices to drink every day of the week, she could not find new markets. It would take ten years. It is not because of lazy marketing that we were trading so heavily on the United Kingdom; it was because it was the most lucrative market that was geographically closest.
Let me address Senator Michelle Mulherin's questions. With the permission of the Acting Chairman, I will ask my colleague, our CEO, Mr. John Enright, to address some issues I have probably forgotten. The Senator referred to the low-interest agricash. We were clearly on the record as saying that while low-interest loans are welcome, they should be the norm. It should not have to be brought around to 2.95%. Irish agriculture pays €80 million more per annum in interest than its counterparts in Europe. We should have the competition in Ireland. We should get the money at a much cheaper rate. We disagreed fundamentally in regard to the low-interest loans because they were associated with a crisis measure funded through the European Union. We felt that was not a reaction to a crisis at the time because the volatility, as the Senator rightly pointed out, resulted in a drop from 40 cent per litre down to 22 cent per litre. No industry could withstand that level of volatility and expect to come out financially fit at the end of it. What we did welcome and what is a new initiative in Europe that has got to be followed through on is the voluntary supply constraint. The Commissioner is open to making it a permanent tool. There was another €150 million spent on that. Immediately it was announced it had the capacity to bring the milk price back up to roughly 32 cent per litre, because there was more equilibrium in the marketplace. When one makes a business decision to put one's cow in calf, one has to wait nine months for the calf to be born and two years for it to come into the parlour. There is no way, with a product such as dairy, which has a three-year lead-in, that a farmer or businessperson can know the position of the markets in three years. Therefore, the free market will not work for agriculture. It never has and it is detrimental to the consumers. A nuanced approach such as the voluntary supply constraint was very welcome. Eventually it was accepted by the politicians, was very effective and worked.
I hope I have not left anybody out. I invite my colleague to contribute.
Mr. John Enright:
I shall refer to Senator Paul Daly's comment on what we, as a country, can do for exposed sectors, such as agriculture, if we have a bad Brexit. Consider the circumstances of a bad result in March 2019, when Brexit negotiations are supposed to be concluded. At national level, we will have two budgets between now and then. It is important in those budgets that we consider measures to support the exposed sectors. We have proposed previously the farm management deposit scheme. In the past five years, probably, our members have seen milk priced at 20 cent per litre and 40 cent per litre. At 20 cent per litre, they are 8 cent per litre below the cost of production. If, come March 2019, we have WTO tariffs and currency volatility, the processors will simply pass the pain back to the farmer. That is the reality. We have nobody to pass it back to from our perspective. The next two budgets must address the sectors that are exposed under Brexit and bring in measures to try to support them. We feel the farm management deposit scheme is certainly a measure that can help our members such that they will have some support in the even of a very hard Brexit to try to maintain their businesses while, I hope, the issues are resolved.
Just before we finish up, I refer to the reception the Irish situation got in Malta last week. While many people in this country believe very little is going on, I was amazed at the level of support we got from our 27 partners at COSAC, all of whom said they had their own problems but recognised the unique problem in Ireland. I encourage the witnesses to bring forward solutions as they see them. As Mr. Barnier said to us, it does not matter how ridiculous a solution sounds; it may just be the one that gets us over the line. There is considerable willingness on the part of our partners in Europe to find a solution to the Irish problem.
I wish the delegates well and thank them very much for their presentations today. The work of this committee is ongoing. If the delegates believe at some stage they want to have an additional witness contribute, they should feel free to do so. We did not hear from Mr. Jonathan Mullin, but I thank him for attending.