Andrew Doyle (Wicklow, Fine Gael) | Oireachtas source

I have been asked to speak specifically on the implications of the result of the UK referendum on the European Union for the agriculture and agrifood sector. The result has the potential to give rise to significant challenges for the Irish agrifood sector. I am keenly aware of the concerns of those working in the sector about the UK's decision to leave the EU.

I have just come from Dublin Castle, where the National Economic Dialogue has been taking place since 9 o'clock this morning. Perhaps inevitably, Brexit has been a major topic at that forum, both in its plenary session and in the break-out session on the Food Wise strategy, which I was chairing until I got the call to come here. While efforts are being made to ensure it does not dominate our discussions, there can be no doubt that the implications of the UK decision have dominated the background to the dialogue.

The UK is by far our largest trading partner in the agriculture sector. Last year, we exported almost €5.1 billion worth of agricultural products to the UK, including almost €970 million in dairy products and more than €1.1 billion in beef products. The UK market is also of great importance for other sectors. For example, 80% of our exports of mushrooms goes to the UK.

Ireland is also the UK’s largest destination for its food exports, worth €3.8 billion. This bilateral trade takes place on the basis of harmonised EU rules on animal and public health and labelling without complex certification, quota limits or customs duties and tariffs. It is underpinned by the vital support of the CAP budget to which the UK is a significant net contributor. Given these linkages, and as the UK is a net food importer of the order of €1.3 billion, both countries have a strong interest in maintaining a close agrifood trading relationship. Safeguarding the interests of the Irish agrifood sector will be central in informing the Government’s overall approach to all negotiations pertaining to the UK’s exit from the EU.

My Department and our agencies, in association with our stakeholders, have been giving careful consideration to the potential impacts of a UK exit, looking at the areas in which the greatest risks may arise and on which we will need to focus when negotiations begin. However, it is important to bear in mind that the EU treaty provides a two-year period for negotiation of exit arrangements. This, of course, depends on the triggering of Article 50 of the Lisbon treaty but we do not know when that will happen. Within that two-year period, existing arrangements will continue to apply. In other words, for now, trade will continue to take place on the basis of harmonised EU rules on animal and public health without complex certification, border controls, quota limits, customs duties or tariffs.

The short-term risk is with the currency exchanges which could do serious damage if not addressed as a matter of urgency. While I do not underestimate the scale of the task ahead of us, I am confident the Department and its agencies are well prepared to address the challenges presented. The resilience of the Irish agrifood sector is well recognised. This, together with the strong commercial relationships built up over years of trading, will help us to negotiate our way through the challenges ahead.

The main areas in which potential impacts are foreseen are with currency fluctuations, tariffs and trade, the EU budget, regulations and standards, and customs controls and certification. The UK exit vote also raises complex issues for the fisheries sector. By way of example, potential differences in tariffs could restrict trade in both directions and affect traditional supply practices, particularly for raw materials. Preferential agreements already negotiated with third countries, especially those dating back to the UK accession, could require adjustment to take account of UK withdrawal. Freedom of the UK to negotiate trade deals with third countries could present a competitiveness challenge for traditional suppliers such as Ireland. Over time, a different approach by the UK to the common regulations and standards currently applied could create issues and require the conclusion of mutual recognition agreements. Origin labelling could be a significant issue in terms of additional costs. There is also the possible disruption of supply patterns and consumer preferences. Border controls and certification would most likely re-emerge and would, at the very least, add to costs. However, in outlining the potential implications, we need to retain perspective. The extent of any risk in these areas ultimately depends on the trade and other arrangements negotiated between the EU and the UK.

This will remain the focus of our planning in the months ahead. Any of these challenges to our trading relationship will not kick in straight away. As part of our overall contingency planning, a dedicated unit has been established in the Department of Agriculture, Food and the Marine to work on all of these issues. It will convene a consultative committee of stakeholders to ensure a full exchange of information as negotiations proceed. The most immediate concerns for agrifood exports centre on the exchange rate. In that regard, the Central Bank has pre-established contingency plans to deal with the potential market volatilities surrounding the referendum result. The bank will engage with the Department of Finance and individual financial institutions regarding potential risks. Actions by the European Central Bank and other global actors will be monitored closely. I have asked Bord Bia to provide practical guidelines to small and medium-sized enterprises to assist them in dealing with marketing challenges as they arise in the short term.

The UK is more important to the agrifood sector than any other in the economy. Any changes to the current trading relationship will be challenging. My Department and all its agencies will be giving these issues the highest priority in the period ahead.

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