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Seanad Special Committee on the Withdrawal of the United Kingdom from the European Union debate -
Thursday, 18 May 2017

Engagement with Macra na Feirme and the Irish Farmers Association

On behalf of the Seanad special committee, I welcome Mr. James Healy, who was elected as national president of Macra na Feirme recently; and Mr. Joe Healy, who is not so newly elected as president of the Irish Farmers Association. I had the pleasure of knowing Mr. James Healy's predecessor very well. We met on many red-eye flights to Brussels when he was going to various things. I think I saw Mr. Joe Healy waiting to get the flight home once or twice. Their reputations and those of their respective organisations precede them. I say that in the warmest way possible. I thank Mr. James Healy and Mr. Joe Healy for engaging in this morning's last session before we break briefly for lunch. Today we are considering one of the key issues facing Ireland in the context of Brexit. We have had some really thorough discussions so far this morning and generally throughout our work. We are looking forward to the input of the witnesses.

Some of those present will be familiar with the usual note on privilege. 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. If they are directed by it to cease giving evidence on a particular matter and they continue to do so, 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. 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. I invite Mr. James Healy to make his opening statement.

Mr. James Healy

On behalf of all members of Macra na Feirme, I extend my gratitude to the committee for inviting us to today's hearings. I am the 36th national president of Macra na Feirme. I am delighted to be joined by our chief executive, Mr. Denis Duggan; our agricultural affairs manager, Mr. Derry Dillon; and our agriculture policy officer, Mr. Paul Smith.

Macra na Feirme is the only organisation representing the unique interests of the young rural people of Ireland and in particular young farmers, so the opportunity to voice their concerns and their vision for life both during and after Brexit is greatly appreciated. We are delighted to get this opportunity to attend the Seanad Committee and to reaffirm our commitment to the European project. Young farmers, and indeed young people across Ireland, many of whom we represent, have benefitted tremendously by the freedoms of movement, financial supports and market access offered by membership of the European Union. Young farmers and rural youth cannot be allowed to suffer the effects of a decision in the UK that is not of our making.

During our recently completed CAP consultation with approximately 1,000 young farmers, the impact of Brexit was to the fore in their concerns. Some of the recommendations proposed in our CAP policy 'Young Farmer Roadmap for Generational Renewal' include maintaining the strongest possible trade links with our largest trading partner post Brexit, and ensuring that the CAP budget is maintained post Brexit.

According to the UK Agriculture and Horticulture Development Board, AHDB, the UK imports approximately 35% of the beef and veal it consumes every year, which amounts to 250,000 tonnes or 50% of the beef produced in this country, and Ireland supplies 70% of that beef meaning we supply almost nine times as much beef to the UK as any other country. In comparison it exports on average 100,000 tonnes of beef but, according to the AHDB, this is mainly due to the lack of processing capacity and most of this meat will end up back in the UK market as a value added product; 37% of what it exports comes to Ireland.

From a sheep meat point of view, the UK has a balance of trade with approximately 100,000 tonnes of sheep meat going in both directions but it is the type of cut that is the differential. According to the AHDB, a lack of processing capacity means that the UK exports a higher proportion of carcasses while importing value added cuts. Ireland is the largest EU supplier of sheep meat to the UK following New Zealand and Australia, while the UK sends over 50% of the meat it exports to France and 9% to Ireland.

From a dairy point of view, UK exports were estimated at £1.1 billion in 2015, with some £800 million generated from trade with the EU and £300 million going to third countries. A total of 90% of UK dairy exports go to the EU, 67% of that going to Ireland. Most of the liquid milk trade between the UK and Ireland occurs in both directions across the Irish Border, therefore putting dairy producers along the Border in a very uncertain situation. According to the AHDB, a large proportion of exported UK liquid milk returns to the UK after processing. For Ireland, the UK market was valued at around €840 million and accounts for some 25% of total dairy exports. In 2015 Ireland exported to the UK 65,000 tonnes of butter and dairy spreads and 139,000 tonnes of cheese, predominantly cheddar.

Taking all of this into consideration, the picture in front of every young farmer around the country but particularly in Border areas is stark. Young farmers are starting their farming journey. They have completed their education and are likely to have had to make significant investment in their business, probably availing of much needed credit meaning that they are working every day just to keep their businesses afloat. This, compounded with currency fluctuation, means that young farmers are more exposed to volatility than others in the same industry.

Now the uncertainty that Brexit has brought about threatens the business of every young farmer in the country as most have not had the time to establish the appropriate levels of capital and financial reserves to protect their businesses from the current and most likely continuing uncertainty and volatility surrounding Brexit. Hence, young farmers face a dark future where the likelihood of their business becoming crippled by low farm returns and a need to repay loans will become a reality if the UK's departure from the EU is a cliff edge scenario.

Macra na Feirme, however, has not come here today to tell the committee what the problems are, we know that it is well aware of them already. We are here to be positive, to identify the priorities that will protect all farmers, young and old, and to offer solutions that we feel can help protect agriculture in Ireland from the sort of crash we saw in the last decade.

The first priority is the relationship post Brexit. There will be a lot of discussion over the next two years about what sort of relationship there should be between the EU and the UK after the divorce has been settled. Listening to the Prime Minister, Theresa May, it sounds as if the UK is going to step out of the customs union. We would, however, propose that maintaining the UK inside the customs union post Brexit should be a red line issue for the Irish Government. Keeping the UK inside the customs union ensures that EU regulations continue without tariffs, duties or regulatory change. In the event that this red line is unattainable, the Irish Government must lobby for a period of transition, where the UK remains within the customs union during any protracted exit negotiations beyond 2019. Temporary membership of the customs union would allow for the appropriate time to be dedicated to developing a full and comprehensive trade agreement.

While political tensions may make this a difficult result to achieve, we believe that this transitional period will allow the time it will take to develop a full free trade agreement which can take anything up to seven years as seen with the recent Comprehensive Economic and Trade Agreement, CETA arrangement. A transitional phase would at least offer some stability in the intervening period. It would also allow time to work out the implications an exit from the customs union would have for farmers near the Border, in particular with the flow of products and services in both directions, which is set to disappear overnight. This would cause huge problems for young farmers especially relating to country of origin labelling. A customs border brings costs and obvious barriers, and it is the young farmer who will suffer in this scenario as most of the processors, especially in the meat and dairy industry, have the financial ability to mitigate the risks facing their businesses but the young farmer cannot relocate his or her flock or herd.

It is highly unlikely, given the complexities of a comprehensive trade agreement, that one will be negotiated within the timeframe set out by Article 50 thus making a transitional agreement essential for both sides to avoid the cliff edge scenario facing all industries at the end of the two year period. Imports are rarely mentioned in the context of Brexit. As a nation we import as much from the UK as we export to it. We are not advocating for more imports. Many of those, however, are inputs required by farmers: agro-chemicals, veterinary products, and tractors, for example, all come from the UK. This is the double impact that is rarely discussed regarding any UK withdrawal from the customs union.

The second priority is identifying new markets, within and outside the EU. Speaking at the Agricultural Science Association Conference last year, economist Colm McCarthy when questioned about Irish trade dependence on the UK highlighted by Brexit countered with the point that the UK is a lucrative market. He argued that of course Irish farmers and agri-companies should seek to supply as much food as possible to our nearest neighbour which eats the same food as us, pays a top price for it, and is the closest geographically to us. It makes complete economic sense, instead of trying to service markets at the other side of the globe.

With that in mind, Macra na Feirme during its recent CAP consultation with 1,000 young farmers, highlighted the view that young Irish farmers want to maintain the strongest possible market links with the UK market. According to the recently published KPMG Farmers Journal global agri-business report, four of the top ten global economies are in Asia and South America, driven by rising levels of new Asian middle class consumption, with over 3 billion new consumers, or 40% more, expected by 2030. Bord Bia recently reported that in 2016 global exports to markets outside the eurozone accounted for 70% of exports, with an 8% decline in the UK and a 35% rise year on year of exports to China.

There is no doubt that strategic targeting of new or emerging markets is economically prudent. However, we cannot afford to leave the UK market without a fight. As a nation, we must defend the interests of young farmers in the UK market. The UK is not self-sufficient in food and in the minds of the UK consumer phrases like "British and Irish beef" are common marketing parlance. Every opportunity must be used to ensure that the maximum viable market is retained in the UK.

Opportunities may also exist as a result of Brexit. However, we in Macra na Feirme caution against over optimistic views of the opportunity from a young farmer perspective. In a possible tariff environment with the UK post Brexit, Irish farmers could seek to displace UK products into mainland Europe. This, however, may not be as economically lucrative as the current UK market due to the make-up of the UK exports for example, replacing UK sheepmeat carcasses for France with Irish carcasses is not as valuable as Irish lamb cuts exported to France.

Bord Bia is to be commended for its efforts, along with the industry, to proactively target new markets for Irish food products through new market exploration and indeed expansion into existing markets. That effort, combined with Origin Green further promoting the sustainability of Irish food produce, is a significant competitive advantage. Over the coming years, Bord Bia must not be left short of either human or financial capital as it continues efforts to ensure Irish product maintains market share and builds new markets.

Increasing the diversity of destinations for Irish products is crucial for the future viability of Irish agriculture. There is a genuine fear that the United Kingdom will pursue a cheap food policy post-Brexit. Speaking in Dublin recently, Patrick Coveney, chief executive of Greencore, cautioned that many backbenchers within the Conservative Party in the United Kingdom favoured a cheap food policy. Bord Bia must have adequate marketing resources to reaffirm for consumers in the United Kingdom the value, quality and sustainability of Irish food products.

The third priority is adopting an all-island approach. Consideration must be given to the implications of Brexit for animal health and the environment on the whole island of Ireland. Diseases and pollution do not respect lines on a map. Within the Brexit negotiations a framework for North-South co-operation and converged regulation of animal health and the environment must be provided for. While it is our understanding that after Brexit the North-South Ministerial Council will have no legal power, co-operation between the two Governments is mutually beneficial. Macra na Feirme encourages the Government to ensure some legal mechanism is created in the negotiations to provide legal standing for such co-operation. Being an island, Ireland as a whole has a biosecurity advantage and our island advantage makes disease control easier. The implications of a future animal health crisis or disease outbreak in a post-Brexit economy include the potential to destroy the combined efforts of initiatives such as Origin Green. An all-island approach to animal health was commissioned by the North-South Ministerial Council in 2001 and could act as a template for continued co-operation between the two Governments post-Brexit. Should such a strategy be continued into the future during times of crisis, it will need to be able to act effectively and rapidly based on solid scientific advice.

The North-South Ministerial Council should also continue the work it has undertaken to deal with the environmental challenges the island faces. It already works in the areas of research, environmental protection and water quality and waste management in a cross-Border context. In the post-Brexit scenario waterway pollution on the other side of the Border, for example, could have a detrimental impact further downstream for Irish farmers. Similar to the advantages of an all-island animal health strategy, a continued all-island environmental strategy is crucial. As a non-political organisation, it would not be appropriate for Macra na Feirme to engage in discussion on a united Ireland, but we are clearly stating the mechanisms are in place today to support all-island responses to issues of animal health, the environment and disease. These mechanisms must be retained in any legal framework negotiated as part of Brexit.

The fourth priority is upskilling. In the Irish Farmers Journal today the research of Dr. Kevin Hanrahan of Teagasc sets out the impact of Brexit on family farm incomes. It worryingly forecasts income reductions of up to 40% in certain farming sectors. The European Union makes significant resources available to member states or regions impacted on by globalisation. Macra na Feirme believes the Eurpoean globalisation fund which is normally deployed in situations where multinationals or large companies close down or relocate with the loss of jobs is relevant. The chief economist at the Department of Finance has warned that up to 40,000 Irish jobs could be lost as a result of a hard Brexit. Macra na Feirme is concerned that many of these job losses would be felt most harshly by young people in rural areas where there are traditionally fewer opportunities to avail of job mobility. If Teagasc’s research is borne out, a significant number of farmers will be forced to exit the industry and should also become eligible for EGF support. Should significant job losses become apparent as a result of Brexit, the European globalisation fund should be deployed to provide training and upskilling programmes to enable those affected by Brexit to retrain.

The fifth priority is meeting increased education demands. Every year a cohort of Irish students who have completed their leaving certificate examinations head to the United Kingdom to complete agriculture degrees in areas such as animal, food and crop science, with agribusiness, veterinary and forestry studies. We estimate that there are approximately 300 to 400 Irish students studying these or similar courses in the United Kingdom. In 2015, according to the Higher Education Authority, just over 3,300 students were enrolled in agriculture, horticulture and veterinary related degree courses in Ireland. On the back of Brexit and if there is no agreement for the shared funding of education courses and the cost of studying abroad between the United Kingdom and the European Union, we estimate that 300 Irish agricultural students currently studying in the United Kingdom could be returning to Irish shores to pursue their studies. If this becomes a reality, there would be a 10% increase in the demand for agriculture courses based on the 2015 figures. The CAO system correlates the demand for a specific course with a number of points. Hence, the return of these 300 students to the Irish third level education system would mean a consequential increase in the number of points required for courses, making it harder for Irish students to gain places on agriculture courses.

UK universities and Irish higher education institutes compete in the Middle East, Asia and elsewhere to attract undergraduate and postgraduate students. Possible travel restrictions and a reduction in the number of EU research opportunities in the United Kingdom could have a positive impact for Irish higher education institutes in their efforts to attract international students. However, any rise in the number of international students must not lead to a displacing of opportunities for Irish students studying for the leaving certificate examinations in years to come. Together, the impact of additional foreign students and the additional demand for places on agri-related courses could create an upward spiral in the number of CAO points required for agriculture courses. Provisions need to be put in place to allow Irish universities, colleges and institutes of technology to cope with the potential increase in demand for places on agriculture courses. If the agri-sector is to continue to grow and expand, it is highly important that there be a continual flow of educated, young and vibrant people into the sector.

The sixth priority is the CAP budget. For agriculture to remain vibrant, we need young people to see farming as a viable career. If they believe they will be washed away by the first crisis they encounter, they will not risk entering the industry. That is why we call on the Government to ensure funding for young farmers is not cut on a pro rata basis with any decrease in the CAP budget following the exit of the United Kingdom from the European Union. We ask the European Union to show its support by maintaining the funding currently directed towards young farmers, ensuring their ability to develop and expand their businesses. We leave the committee with a challenge. Can we have a commitment that, as Members of the Oireachtas, committee members will sign off on an increase in the Government's contributions to the EU budget to sustain the CAP budget for young farmers?

I thank the committee for its time. We will be happy to take questions from members.

As a committee, we are not in a position to give commitments at this stage. However, we will ensure all of Mr. Healy's concerns are included in detail in our report. That is the best we can do. I will move swiftly on to Mr. Healy from the IFA.

Mr. Joe Healy

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

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

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

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

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

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

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

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

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

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

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

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

I thank Mr. Joe Healy. As someone who is often made fun of for being a south Dublin suburbanite, I stress that this whole session is fascinating for me. It is not something I am alien to.

I am very proud that the area I represented had 63 members of the Irish Famers Association, IFA. It was not exactly a massive number, but they all went down. We also have a thriving branch of Macra na Feirme in south Dublin. Obviously I come from a family with a strong link to the agricultural sector both in terms of supply and agribusiness. Both of those presentations were really excellent. We are really grateful. We have had an excellent day's work so far. I commend the work that both organisations do. I watched the live stream of the meeting in Goffs. It was top notch. If we had more people doing that from various sectors we would be in a really good place - not that we are in a bad place, but we can always be in the best place.

Not unlike the Chairman, until very recently I thought milk came from bottles, but I recently learned it had moved to cartons. I am extremely impressed by the level of preparation that both Macra na Feirme and the IFA have put in. I only arrived as the Macra na Feirme presentation was beginning because I am involved in another committee. One of the things this committee set out to do was to look for solutions. As I believe the speaker from Macra na Feirme said, the problem is well rehearsed in every corner of Irish life at this stage. The amount of thought that has gone into the witnesses' work has been most impressive.

In trying to get to questions, there were a couple of things mentioned, particularly on the education side. It is an area in which I have a huge interest. In respect of the approximately 300 students mentioned which we send to the UK each year, in the event of a hard Brexit, the first problem we are going to face is the fees for those students, assuming we can get them into the UK in the first place. That is the first problem we have. The second problem that we are likely to run into is that, if standards change and they are taught to a curriculum which has different standards, recognition of their qualification when they return home will be an extremely serious challenge for members of Macra na Feirme particularly, because that organisation deals with the future farmers of the country.

The first priority set out was the relationship post-Brexit, and I think it was well set out. Firstly, I would like to say to Macra na Feirme what I said to the Ulster Farmers Union this morning - that we give them a clean canvas. We take everything that is on the table off of it. Macra can now draw or paint the canvas for us to show us what it wants. The Chairman and I met Michel Barnier and other members of the European Parliament some time ago in Brussels. They all said the same thing to us - they too know the problems and are very well-rehearsed on them. They want solutions coming from Ireland. They were not shy in saying that the solutions need not necessarily be the most intelligent or sound. Something completely off the wall may actually work for all sides as we go forward. I ask Macra to have a look at that.

Moving on to the IFA, one of the things that bothers me is whether it is an issue of taste that there are no serious markets for cheddar outside the UK. Is that an issue of taste or of competition from other parts of the world? Is there a saturated cheddar market out there? I am not sure. I know the English taste for cheddar and I have long been a fan of the same cheese myself. I am very much aware of it. Again, when we look at agrifood exports and what is happening between the UK and Ireland, I honestly cannot see a way that we can separate out North and South. From an IFA perspective in particular, it will have members whose land straddles the Border, with some land in the North and some land in the South. That seems to be a massive problem. I am not sure where we are going with that.

The IFA's products are sold on the world market as Irish beef, Irish lamb, Irish pigmeat etc. I assume our colleagues in the North of Ireland brand their produce in exactly the same way - as Irish. If we have a divergence between standards, that will be a serious problem for the marketing of our product. The IFA's aspiration to hold market share in a UK which will now be dealing on the world stage will be very hard to secure. There will be cheap Argentinian beef and cheap lamb coming from wherever. At the end of the day, there are parts of the UK where price, not quality, is the issue. I assume that we sell at the tightest prices at which we can sell. I assume massive profits are not being made from the UK market. If we are going to compete on price and price alone, because quality may not be the issue in some parts of the UK, how are we going to fare?

When the witnesses talk about the Common Agricultural Policy, CAP, and I am interested in the views of both groups on this, it is my view that the European Union should be pumping in supports to allow us to diversify into other market areas and to provide for the building of a cheddar mountain or a beef mountain in order to support our industry until we have developed those markets. If this is a hard break, which looks very likely, we will have to find something outside the UK. The Ulster Farmers Union made the point this morning that even if we did diversify outside the UK into other world markets we would have to work really hard to earn the same sort of income that we are earning from the UK because we are selling premium cuts and getting the top end of that market. I would be interested in the witnesses' views on that.

Again, I ask the president of the IFA, and it is probably an unfair question to ask as he has only been in the job for about a year and a half, but if he had a clean canvas, what would he want from both governments? Clearly we cannot dictate to Theresa May what she will want from Brexit, but if he could what would Mr. Healy want? I thank the Chairman. I hope that has not been too around-the-houses.

I welcome both delegations and thank them most sincerely for their presentations. At this stage, almost a year down the line, we are all fairly well aware of the facts, figures and perceived consequences. Unfortunately, solutions are not that easily achieved from the point of view that, as we are all aware, we will be one of 27 when this negotiation gets down to the nitty gritty. Both organisations, and particularly the IFA, are world leaders when it comes to negotiating and lobbying. They are in Brussels more often than many in this House. I ask them what they gauge the feelings of the other 27 to be? I was out some while ago with a group from the Joint Committee on Agriculture, Food and the Marine. While it was not officially across the table, when we walked away from the table I certainly got the impression that, while we were talking about the CAP and CAP reform, they kept bringing up Brexit. Perhaps it is the cynic in me but I walked away saying to myself that these lads think they are being very sympathetic with our Brexit situation and that if they look after us in Brexit they will be entitled to wash us down the Swanee when it comes to the CAP. The Polish representative in particular made a point of the Russian embargo and of who looked after his country in that similar situation. The witnesses are preaching to the converted here and in the other House and when dealing with anybody who has a voice in this thing.

How do they see it going and, through their negotiations and lobbying in Europe, how do they see the views of the other members of the 27 about our agriculture sector? We are dealing with agriculture specifically, although there are so many other strands. As has been said, agriculture is probably on the back of the page when it comes to Theresa May's list of priorities. Therefore, how much negotiating time, when hard negotiations begin, will be allocated to agriculture?

Earlier we had the Ulster Farmers Union before us and I asked its members about how much contact it had with the IFA and Macra. They are all working well together. I think that is important from an all-island perspective. I said that to the Ulster Farmers Union. I know it is repetitive but the organisations are similar. Many people we have had before us, and many outside commentators, are flying a kite about Northern Ireland getting a special status after Brexit, which would help to maintain our all-island situation and minimise or eliminate the possibility of a hard border on the island.

It is a great idea in theory but if one analyses it from the perspective of agriculture, it means that our border is east-west. There will be an imaginary line in the Irish Sea between Ireland and the UK. Our milk situation, our pigmeat and everything else on the island will be sorted but we will need an agricultural border on the island, in my opinion. We will have farmers in the South who are still under the CAP while the Northern Ireland farmers, even if they are in an all-island agricultural model, will still be in the UK and will probably be outside of the CAP. A Northern Ireland farmer who exports across to England will not be paying a tariff but farmers south of the Border potentially would be paying such a tariff. We could have a segregation of the island. What a lot of people are putting forward as one of the better scenarios could be, from an agricultural perspective, a time bomb. Maybe I am wrong and I would like to hear the opinion of the witnesses on that.

While not wanting to pre-empt the response to Senator Craughwell's question, there is nowhere else to go with cheddar. Even if we built a cheddar mountain, it would still have to be eaten by the English because the Europeans would not want it nor would the Chinese. In that context, where do we go? Where do we go with mushrooms? Before the Brexit vote we were scouring the world for new markets. I used an analogy previously of being tortured with an ingrown toe nail, but if one hits one's thumb with a hammer, one will forget all about the toenail. That does not mean that it is cured or that the pain has gone away. It merely means that the thumb becomes the priority. Brexit has become our priority but we had a lot of problems before the vote. We were already scouring the world, looking for markets. What new markets do we think are going to mushroom - pardon the pun - in the aftermath of Brexit that were not there previously? Bord Bia and so many other agencies have been out there, trying to get new markets. There are not going to be any new markets. The market is still there. The English are still going to have to eat. In that context, can the witnesses see any bright light in this? Is there any positive potential in any one of the possible outcomes? We are in a bubble here in the sense that we are talking about the unknown. The only certainty here is uncertainty. We must, for the purposes of our report, get as much feedback from as many different perspectives as possible. We must examine the various scenarios, from worst case to best. I ask the witnesses to elaborate on these points.

I thank the witnesses for their presentations. I am not involved in farming myself but my father was born on a farm and my cousin still runs a farm. I would have spent a lot of time on the farm and understand the complexities of farming. I also understand how hard it is for farmers, particularly those with small holdings. I can only imagine the anxiety and stress that they are under at the moment. I was talking to my cousin at the weekend. He lives in the North. He talked a lot about his concerns and is actually thinking of retiring.

The presentation was fantastic. It was very clear and will be very useful in the context of the preparation of our report. Reference was made in the presentation to the fact that the pollution of waterways north of the Border could have a detrimental impact further downstream for Irish farmers. I ask the witnesses to elaborate on that point. While bearing in mind that Macra na Feirme is a non-political organisation, do the representatives believe that a united Ireland would be beneficial for the farming sector? I ask them to be really honest and to answer from the position of concern for the people that they represent.

Mr. James Healy

I will address the second part of Senator Craughwell's question first. If we had a clean canvas, ideally the UK would not leave at all but obviously that is not going to happen. The IFA has said that ideally the UK would at least stay within the customs union, a position with which we concur. That would maintain an equivalence of standards to a very large degree and would ensure that there are no tariffs. From a trading point of view, it would make the picture an awful lot simpler. It would also limit the ability of the UK to go off and conclude trade deals with third countries, including those in South America, and would make such deals much less profitable. That would leave us in a much better position in terms of being able to retain our market share in the UK.

In terms of the first part of the Senator's question, staying in the customs union will not solve the educational part of the picture. There would have to be some sort of an arrangement between the EU 27 and the UK on education, as well as on other issues such as pensions and so forth. Some sort of agreement will have to be reached whereby students could still travel from country to country. We have UK students in Ireland and there are many Irish students in the UK, which is to the benefit of both countries.

Senator Daly asked about the point of view of the other EU member states. As it happens, Mr. Derry Dillon and I were at a meeting in Brussels yesterday of the Conseil Européen de Jeunes Agriculteurs, CEJA, the European young farmers organisation and Brexit did not even get a mention. It was only during conversations after the meeting that we were able to ask for their opinions. While Brexit is in the back of their minds, it is not something that is a priority for European farmers, except for those in the Netherlands who would also have a large amount of trade with the UK. They recognise that it will be important in time but at the moment it is not a priority for them. They are far more concerned about migration, terrorism and such issues. Unfortunately, Brexit is not on the list of priorities.

Reference was made to special status for Northern Ireland. We are concerned about Northern Ireland from the perspective of animal health because diseases and other environmental threats do not recognise lines on a map. If we are to continue to sell ourselves as a green island, to maintain our origin green status and to support the sustainability that we are marketing, we must have an all-island approach. That brings me to the question posed by Senator Black. A united Ireland might address some of the issues raised by Senator Daly, including the disparities between farmers north and south of the Border in terms of supports and access to markets but an all-island approach is more of a priority. The overall marketability of our product and the selling of Ireland as a green island comes back to issues of animal health, environmental standards and so forth. In terms of Senator Black's question on the environment, if there is an outbreak of disease or a slurry spill one side of the Border, the contaminated water will flow to other side of the Border. It is unfair for farmers on either side of the Border to have to suffer the consequences of something that may have arisen on the other side. At the moment Ireland is attempting to hold on to its derogation under the nitrates directive. Water quality and water quality management is a huge part of that.

If one was to separate North and South from that perspective, it makes it very difficult for farmers, particularly around the Border, to maintain water quality. They could suffer again for something not of their own making. That is why we believe it has a huge part to play.

Senator Daly mentioned that those in the UK still have to eat and that is why we do not want to give up our share of the market in the UK at all costs and them being part of the customs union is a red line issue that we have identified. The Senator said they still have to eat and we want to maintain competitiveness in the UK. If the UK is outside the customs union, the tariffs that will apply may make our produce less competitive and affect our market share. I agree with the Senator's remarks about new markets that might suddenly appear. I spent three weeks in China last year and, particularly with beef in mind, I know it is not something they would even think about eating. That is a major area of produce that will be affected by Brexit. The new markets will not solve our problems so it is about maintaining the best possible relationship with the UK from a trade perspective. That is how we will protect the incomes of farmers and, in turn, the quality of life for all people in rural communities.

Mr. Joe Healy

I acknowledge the honesty of a number of Senators in highlighting the fact that they might not milk cows or herd sheep every morning. There is really no part of Ireland too far removed from rural Ireland. As Senator Black rightly said, she has an uncle and cousins on the farm, and there are very few people anywhere in Ireland that would not have direct family members involved.

The first point raised concerned cheddar cheese. Every Member would have received our document at some stage. Of our cheddar, 78,000 tonnes or 82% goes to the UK. There is not really an alternative. In the past two days we have been in the Netherlands and Germany, and we had a meeting with representatives of Ornua at its Kerrygold plant yesterday in Germany. The taste of Europeans does not tend towards cheddar, so as I highlighted in my speech earlier, there is not really an alternative there now for the cheddar market in the UK. As the person who put the question states, it is probably a question of taste and culture.

There was a question as to whether it is aspirational to believe we can hold trade with the UK. We must believe we can do so. I should make it very clear there are no winners here and no matter what way we look at this, it is a damage limitation exercise right across all sectors and particularly in the agricultural area. A number of things have been said by UK and European politicians but perhaps the best thing to do now is allow British Prime Minister May and UK Government officials get on with their election. We have always said that statements are made during an election that may not be carried through thereafter. I say to European politicians not to get involved.

It would not happen here.

Mr. Joe Healy

I do not disagree with anything said by Mr. James Healy. If we had a clean canvas, we would go back to 22 June last year. In the absence of that, we seek for the UK to remain in the customs union and retain the closest possible trading links between the UK and European Union. That in itself is not enough and we must maintain the value of the market in the EU, which from an Irish perspective, is worth over €4 billion for agrifood alone. We cannot see a position where the market is undermined by cheaper imports of food from countries where the standards of production are not even close to what we have in this country. I was in Brazil at the end of last year and I have seen production first-hand. We recently saw the lack of trust and sharing of information between the Brazilian authorities and the EU. There is a major breakdown of trust in that regard.

I acknowledge that agriculture is high on the Brexit agenda in this country. We met Mr. Barnier on four different occasions and it was noticeable that he mentioned agrifood four if not five times in his address to the Dáil. I would like to see it a bit further up the agenda and within British Prime Minister May's sphere of interest. It may have been pointed out already this morning but from the UK farmers' perspective, nine of the top ten countries from which the UK imports food are in the EU, with seven of the top ten countries to which it exports food being in the EU. The EU is very important to the UK and especially its farmers. There is also between €3 billion and €3.5 billion going to UK farmers from the Common Agricultural Policy, CAP. The CAP has been very good to all EU consumers. If people are not from a farming background and hear of the Common Agricultural Policy, we might just think of supports for farmers. In 1962, when the CAP was introduced, the average family spent 30% of family income on food; last year, the average family would have spent 12% of average income on food. I would like to think the food produced in Europe is the top-rated in the world. That is what the European consumer is getting as a result of CAP; it is not restricted to the Irish consumer but its effects are felt right across Europe. I mentioned the 300,000 people employed directly or indirectly in agribusiness in this country and there are 44 million Europeans involved in the agrisector. It is a lot of people and, as I mentioned, we are dealing with people's livelihoods.

There has been comment on the level of interest from other EU countries. We have met a good few EU politicians and ambassadors since last June. The message we were getting in July and August was that they were listening to us and, more or less, that they sympathised with us but "they" had to be taught a lesson. I have to be honest and say that was the clear impression I got from them. It was that we cannot have a position where a country is better off outside the EU than inside it. I would like to think that in the meantime perhaps attitudes have softened somewhat. From speaking to politicians from across Europe and other agricultural organisations, I know that when we spoke about just the effect in Ireland, it was grand because it did not affect them; we started talking about the €45 billion of EU food going into the UK, and the negative impact on prices if this is displaced from the UK to the EU market, which is already fully serviced and what would happen with 270,000 tonnes of beef we put into the UK. Geography dictates much trade and that is why the UK is so important for the likes of cheddar, mushrooms, poultry, pig, lamb, beef and dairy products. We would look to the next place beyond the UK, which is the EU market, and we will try to dump - or whatever term one might use - the 270,000 tonnes of beef into the European market. The EU market is already fully serviced for beef.

It is like anything in that once one goes over what is required to supply a market, one will depress the market. We have found that European politicians and other farming organisations will engage when they realise that they would be badly affected if the €45 billion worth were to come back onto their markets. That has been our experience.

I mentioned Germany already. We speak about looking at other markets, which is why I mentioned the need for adequate funding for these areas in the Department of Agriculture, Food and the Marine and Bord Bia in terms of accessing other markets, even though those markets might not be as good, and they will not be as good. From an Irish point of view, the best market in the world for agrifood products is the UK but we are exporting food to 160 or 170 countries around the world.

Irish food has an incredible reputation. Kerrygold, for example, is the number one butter in Germany. I think it is number two in America. It is incredible that a small country such as Ireland has such a hold in those countries. However, speaking to the top man in Ornua's Kerrygold plant in Germany yesterday, it has taken Kerrygold 40 years of solid progression and building success on success to get where it is today and it is not where it wants to be yet. There are still huge openings to increase its market share. However, we will only increase market share in those countries if there is adequate funding. Yesterday and on previous days, we saw the amount of work Bord Bia has done to highlight the safety and reputation of Irish food. We need to ensure that continues to happen.

On special status, we have always stated that we accept fully that we must negotiate as part of the EU 27. That is clear. However, let us remember that this vote is unprecedented. A lot has been happening over the past months and that will go on in the future. It has been and will be unprecedented from a European point of view. Let us not be afraid to ask or to be bold. All anyone can say is "No". Politicians across Europe understand the significance of the UK market from an Irish point of view. I already mentioned common external tariffs on foreign food coming into the UK or the EU. We need to try to ensure in the negotiations that there is a common external tariff.

Those were the points that I had jotted down. If there were any areas that I have left out, please-----

I know that Senator Craughwell wanted to come back in but we have gone way over time. Senator Craughwell might be able to take it up in the margins after the meeting. We were to be out of here before the hour. I ask the Senator his forgiveness and apologise if that was a bit abrupt.

I thank the organisations for their presentations, we greatly appreciate them. This will be an open and lengthy process and we would like to continue our engagement with them.

Sitting suspended at 2.05 p.m and resumed at 2.55 p.m.
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