Impact of Brexit on the Agri-food Industry: Discussion

I welcome the representatives from the IFA: Mr. Tim Cullinan, president, and Mr. Bryan Barry, assistant director. I also welcome the representatives from the Irish Natura And Hill Farmers Association, INHFA, who are joining us remotely: Mr. Vincent Roddy, director of organisation, and Mr. Henry O'Donnell, Donegal national council representative. We have received the witnesses' written submissions. They have been circulated among members. With the Covid restrictions, we are very tight on time. Each meeting must conclude within two hours so we are going to take the opening statements as read.

Witnesses are protected by absolute privilege in respect of their evidence to this 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 qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of the proceedings should be given. They should respect the parliamentary practice that, where possible, they should neither criticise nor make charges against a person, persons or entity by name or in such a way as to make him, her or it identifiable. I advise witnesses giving evidence from a location outside the parliamentary precincts that the constitutional protection afforded to witnesses attending to give evidence before committees may not extend to them. No clear guidance can be given as to whether, or the extent to which, the evidence given is covered by absolute privilege of a statutory nature.

The current position on Brexit is such that it is really starting to send shivers up our spines. This morning, I learned that €1.6 billion in tariffs is the possible cost of a no-deal Brexit to this country. Ninety per cent of this will be related to the agri-food industry. It really brings into focus the huge challenge we could face in the context of no deal, but even in the context of a deal there will be many problems regarding trade, including our ability to trade with the UK.

I shall open the discussion to the floor. Members may ask questions to representatives of both organisations.

I apologise as I have to go to another meeting shortly. Witnesses may not be that familiar with the tripartite bloodstock agreement between Ireland, the UK and France but I will ask my question anyway. I am aware that it is a slightly specialised area so I will be happy to ask somebody else if it is not within the witnesses' remit. The tripartite agreement is on the movement of bloodstock. In the region of 25,000 bloodstock journeys are made from Ireland to the UK and France and back every year. That arrangement will, of course, come into jeopardy from January. I do not know what negotiations the witnesses are aware of. They will be aware that the majority of brood mares in this country are held by farmers with fewer than four per farm. This is really interesting and it clearly tells us that brood mares are held right across the country, in many cases as a sideline for farmers. It is a unique industry and it feeds into the rural economy and rural expenditure. We are famous for our bloodstock, as the witnesses know. This matter relates to breeding stock, travelling for racing and movements across the jurisdictions. I realise it is a slightly specialised area so it may not be part of the witnesses' brief. If they have a comment on it or are aware of any negotiations on it, they might be able to share the information with the committee.

Mr. Tim Cullinan

I would not be aware of any negotiations directly on bloodstock but I assume that the same criteria will apply to bloodstock as will apply to livestock. With any movement of animals, there will be sanitary and phytosanitary checks on crossing the Irish Sea. I presume that if there is no deal, trading will involve a tariff. I have all the tariff rates for agricultural products but I do not have them for bloodstock.

I appreciate that.

I thank both the IFA and the INHFA for their submissions. Farming organisations have been acutely aware of Brexit. Agriculture is probably the first sector to have been across Brexit, long before the referendum took place. Farmers were the first to recognise the challenges that Brexit could present to Ireland. As we speak, we could be hours - never mind days, weeks or months - away from a no-deal Brexit.

The challenges regarding agri-food products are threefold. The first concerns the all-Ireland dimension to our food production. There is a need to ensure it is as seamless as possible. The island is too small to have farmers competing against one another on an international stage, which is essentially what we are dealing with. The second issue is the British market, the most important market for Irish food produced in the North and the South. Access to the British market is crucial. Not alone must we consider Irish food producers' access to that market but we must also consider who else will have access in a post-Brexit scenario. The market could be flooded with cheaper imitations of Irish products. The third dimension, which is crucial, concerns the fact that Britain is a land bridge to another important market, namely, the rest of the EU. How do the witnesses believe we fare regarding the three potential threats, which have been known about since the very outset?

I have specific questions on the witnesses' written submissions but I will wait until others contribute and then we will see whether I have a little time in which to go into detail on them.

Mr. Tim Cullinan

We have a very clear view. The Deputy is correct in that, back in 2016, we had the first conference on Brexit, specifically on the all-Ireland dimension. That is what the Government signed up to with the protocol. We all hope the regulations in this regard will be adhered to. We are all hearing about the Internal Market Bill. I understand there is some positive news about it this evening. It is critical that the trade continue north and south, but also east and west. Specifically on the Deputy's question on the North–South aspect, as we know, there is an increase of 90% in the volume of live cattle being transported to Northern Ireland from the South this year. This is critical to support the trade in southern Ireland. In the region of 80,000 to 90,000 cattle will have been transported to the North for slaughter this year. Half a million lambs are sent to the South from Northern Ireland every year.

Approximately 8,000 to 9,000 live pigs are transported to the North for slaughter each week, and 40% of the milk that is produced in Northern Ireland is processed in the Republic of Ireland, mainly in Lakeland Dairies. The trade that is there is absolutely essential. We want to ensure that it continues and that is our policy. We want to be able to trade with Northern Ireland and we are very keen to see more movement of beef - and live animals in particular - to the North for processing there. Perhaps that will help with the deficit in the British market. If one looks at it, the Republic of Ireland has supplied beef to the UK market for as long as we can remember. It is important that this can continue and hopefully the Northern Ireland protocol will facilitate that. We put €5.5 billion worth of food into the British market last year, which includes 40% of our beef, 30% of our dairy and 100% of the mushrooms produced in this country. If something goes wrong and if we end up with tariffs, the consequences will be great. The Chairman mentioned it already, and our figures are similar. Our figures state that a no-deal Brexit will cost €1.5 billion per year, which is a massive cost. Compensation will need to be provided should that occur. Two countries lobbied for a €5 billion emergency fund during the negotiations in Brussels on the Common Agricultural Policy, CAP, earlier in the year, namely, Ireland and Belgium. I know the French indicated last weekend that they wanted some of this money to be used to compensate for the loss in fisheries. However, I made it very clear yesterday in the European Parliament that Ireland is must get proper compensation if it is going to end up in a no-deal situation with tariffs.

On the third country issue, that is a risk. We want to ensure that standards are upheld and there is a level playing field. That is critical. The last thing we want to see is the UK doing a deal with a third country. If cheap beef and perhaps chlorinated chicken are being imported, that will be very concerning for our market.

On the issue of the land bridge, it is critical that the land bridge is maintained and that we need to get the best access possible to Europe. It was agreed earlier in the year that there would be green lanes for Irish trucks going from Britain onto Europe. That needs to be done and those lanes must be freed up. We need to see measures taken around that and to be honest, I am very concerned about it. There must be more direct access. The announcement last week of an extra ferry route between Rosslare and France is a welcome development. We need to see more traffic using such routes, because the checks that will be made on goods coming in and going out will slow the process down. We have been lobbying for these measures for the past number of years, and all of the measures that are in our Brexit emergency plan are included in that.

Mr. Henry O'Donnell

First, on the issue of the all-Ireland dimension, as an organisation with many members, particularly in the Border region and here in Donegal, we see how critical the issue is. We have concerns and as many aspects remain unclear, we need clarity going forward. We need clarity on goods or animals coming from Northern Ireland into southern Ireland to ensure that they are always classed as Irish produce when they may be exported further on from Ireland. We also need clarity on some of the rules of origin in respect of materials which may be assembled in the UK or mainland Britain, containing parts that may not meet EU standards in the future. Clarity is therefore required on the rules of origin to prevent a situation in which products, potentially containing inferior raw materials that cannot or will not be used in Ireland, come into Northern Ireland and are later exported further into the EU. Such a situation would create unfair competition in the market for Irish farmers. There is great uncertainty and clarity is required.

As regards access to the British market, it is a huge issue for our beef farmers. This access must continue. Much of our beef currently goes into the market at commodity prices. Forward thinking is required here, and we must look at planning for the introduction of a naturally reared suckler beef brand that could be sold at a premium price to Britain in the future. As it stands, we could face huge competition from third countries with very low priced beef products. We must start looking at alternatives that will give us access to the UK market and provide a return for our farmers.

On the issue of the land bridge, we can see already that it is going to increase the cost of our exports. It seems to be a fact of life at this stage. Therefore we must look at the alternatives. This could entail not placing so much emphasis on going through the UK, looking at alternative ports, such as Rosslare, and opening up direct channels into Europe.

Finally, I wish to make a general comment on the whole issue of tariffs and restrictions. I am extremely concerned for the beef industry in particular, considering our major processors in Ireland, which also have a big presence in the UK. The policy and interventions due to Brexit must take into account the primary producers, who must be supported. What is good for the processing industry in this situation may not be good for the primary producer and all members should be cognisant of that fact.

I welcome the representatives from the IFA and the INHFA, and I thank them for their attendance today. We have been discussing these issues since 2016, almost within a vacuum, and while we might be getting closer to D-Day, we are no wiser as to what the outcome will be. We are all aware and have hashed out and discussed at length, the issues and the problems with tariffs, so there is not much point in going there again until we know what we are talking about. Even without Brexit, we could still have a six-hour meeting today with the two organisations represented here. Many problems and issues existed pre-Brexit, particularly from the perspective of farming families trying to make an income, so we would have plenty of issues to discuss, even without Brexit. I am fearful that our eye has been taken off the ball in the sense that our focus is now 100% on Brexit, and many other issues which are affecting the sector are being neglected to an extent.

I have a few questions. There are sectors other than agriculture that are waiting on the outcome of the negotiations over the next few days, whatever that may be, and they have no idea how it is going to affect them. From the night the result of the UK Brexit referendum vote was announced, the agriculture sector, and the mushroom industry in particular, took a massive hit. The agriculture sector has an advantage in that we already know how it may be affected, regardless of whether the outcome is deal or no-deal.

Forgetting about whether or not a deal is struck, are there potential gains to be made from this situation? I would like to know what contingency plans both organisations have put in place or how they can see the sector developing to reap some of the potential benefits. Like others, I was shocked last week to learn that the humble spud was being used as a tool for leverage in the negotiations and to realise that there may be no chippers operating in Ireland if we cannot get potatoes in from England in future. Therefore, there must be potential for the re-emergence of the Irish potato sector, not necessarily on a commercial scale, as was in my younger days, when there were a few drills or a half an acre of potatoes on every farm in the country. Is there potential there, and do the organisations have contingency plans in place? Have they looked at potential benefits that might come out of this situation?

Another point that is of interest to both organisations but perhaps the INHFA to a greater extent, is that depending on how Brexit goes, the Welsh sheep might not be going to France. Is there potential there for us? Could our sheep sector be a big winner in this if we are prepared for it, have our homework done and have plans in place with the correct supports from the Government?

Mr. Tim Cullinan

In every crisis, we have to see where there are benefits. There is a risk with the potato sector. An issue was highlighted last week by one of our members, Thomas McKeown, concerning a scarcity of larger potatoes for chip production. We will be looking at this with our members to see if farmers would be interested in developing a sector growing larger potatoes for that market. On seed potatoes, that will always take time because there are rights around the seeds and so forth.

The Government needs to step up to the plate as well. Everybody has been highlighting the costs and concerns around Brexit. We must also look at the gains.

We have a specialised group of people growing vegetables in Ireland. What happens every year coming up to Christmas is that the retailers put vegetables on promotion. In some years, I have seen vegetables left in the fields and they were imported into the country. We have a group of people growing vegetables. The first call by any retailer should be for Irish produce. The public's first call too should be to buy Irish, particularly coming up to Christmas. That is an area on which we can focus. Farmers are growing vegetables. We must ensure they are better supported with some Government support around that too.

As I said already, every year 500,000 lambs come from Northern Ireland to the Republic for slaughter. It is important that we continue cross-border trade. It also works both ways and we can look at new markets. Since the start of Covid, the food service sector closed down and consumers are eating more at home. Lamb was always a product which did not sell in the food service sector. We have seen a significant demand for lamb for home cooking. It has also been promoted. There will be an opportunity with lamb but it is about trying to find new markets.

For some while, I have been raising with Bord Bia as to why it, as a State body, has not been looking for alternative markets, particularly for beef, over the past four years. The message going from this committee should be about why Bord Bia was not looking for alternative markets. There is no point in looking for them this evening when we are at a crisis point.

Mr. Henry O'Donnell

There is an opportunity in general terms to increase the resilience of our farms and perhaps appreciate some of the farming systems we have that are not hugely dependent on outside inputs and imports.

I have already touched on beef going into the UK. It is an area which will be coming under pressure. We need to be imaginative to do something with our produce and not just be selling it is as the lowest cost alternative. Traditionally, there is much trade between Ireland and the UK simply because it is cheap. As to how sustainable that is for farm families is another question. There has to be an opportunity for our naturally reared beef to be sold at a premium. Farmers need help to develop this. We have already looked at this with Bord Bia. Hopefully, something will be initiated.

There is the whole area of the diaspora. There are so many second-generation Irish in the UK whose parents or grandparents came from Ireland. We have a connection with these people. If we marketed our produce properly, a market could be developed which would have significant returns for farmers and be good for everybody.

There are definitely opportunities in the sheep sector. We need to see how Brexit pans out. At least the sheep industry can be developed in a relatively short time span. Our sheep farmers would step up to the mark and produce more if they saw a viable return from it, as there has been this year.

I agree with the Senator on the potato sector. As Mr. Cullinan said, it takes a bit more time to develop that sector but we have to be imaginative and look at things differently. Just because we have had trading relations in the past, there is no reason why high-quality produce from our farms cannot be sold to alternative markets and, hopefully, even at higher prices.

I thank the witnesses for attending the committee.

Mr. Cullinan and the IFA were in Brussels in the past week or two. The IFA has raised the possibility of stopping imports from entering the EU. Up to 100,000 tonnes of beef are imported from the UK and I agree with them on the Mercosur deal. Did the IFA talk with MEPs? In the event of a no-deal Brexit, what support was the IFA getting from the 700 or so MEPs? What was the feeling about stalling that deal, which would give us the opportunity to put more beef into Europe? State aid rules have been relaxed but they will need to be relaxed more.

The EU is looking at the export of calves. Will the associations agree there is a requirement at Rosslare for lairage? Private individuals in France spent much money last year working on developing more capacity and being able to handle more of the suck calves going out. Will the associations agree with more infrastructure in the line of lairage at Rosslare? There are more boat journeys, which will be a help but these are weather dependent. There is no point in codding ourselves on that.

Over the past six months, many bullocks and heifers were going across the Border and it gave a lift to the market. Was this buy-in for storage? In the event of this doomsday scenario, will more cattle be exported on the hoof? Will we need to get prepared for this?

As Mr. O'Donnell has mentioned, there is an opportunity with the sheep sector. Will sheep coming from the North pay the tariff in? Will the sheep in Southern Ireland be totally different? We know there are sheep coming in from the UK, such as stags, ewes and probably lambs, into the North.

I saw the beef one and the milk one. Are sheep at the same rate as beef, be it on the hoof or slaughtered? I have glasses but I might not have seen it.

Before Mr. Cullinan answers, I would like to expand on Deputy Fitzmaurice's question on calf exports. We have seen reports in the media about flying calves to their destination on the Continent. Does Mr. Cullinan think this is practical economically? Whatever figure we want to talk about, we need to export a serious amount of these black and white calves every spring to keep competition in the trade. We see the results of the large number of calves that went two years ago in the factory trade at the moment. Has the IFA carried out research into alternative modes of transport if we do run into trouble with the traditional way of getting calves to the Continent?

Mr. Tim Cullinan

I will take the Chairman's question first. I was going to bring it up anyway. The Chairman is right. We must look at alternatives. The ferry is important as well. We want to ensure this continues but we are looking at alternatives because if we look at what is happening with calves, we can see there is a limited market for calves for the Netherlands because of all that is happening in the food services sector. As there is a limited market for veal, we must look further afield. Teagasc is carrying out a trial involving flying a plane with 900 calves to Ostend in Belgium. At least if the calves can get there, it would be easy enough to distribute them right across Europe. Flying is more expensive at almost double the cost but we could get into newer markets. There is a demand in Spain, particularly for Friesian bull calves, but even for the Jersey cross calves. There is a market in Spain for calves that might be 12 to 15 weeks old. We might need to look at countries outside the EU to find new markets. Again, this is a job that our food marketing body, Bord Bia, needs to be doing at the moment. We have made representation to it on that point already. The Chairman is 100% right. We must look at where we are. We have approximately 1.5 million dairy cows and 800,000 suckler cows. If we are to keep those calves at home, we will have a consistent kill of well in excess of 40,000 per week. As we all know what happens if more than 40,000 cattle are killed per week, the answer to the Chairman's question is we are working on that. We want to see calves flying out this country. Teagasc is doing trial work on that.

In response to Deputy Fitzmaurice, it is very important that whatever must be done to facilitate calves going through Rosslare, also be done, be it lairage or something else. I think it probably would be more important to know there is enough lairage at the other side when they get there, because there needs to be a resting period. I get the Deputy's point. If trucks go down to Rosslare and cannot get on a ferry, that will prove difficult. As we are already seeing problems with trucks moving in France, that is also a concern. Perhaps we do need a facility there to deal with that.

Going back to Brussels and what support I was getting for a ban on beef coming into Europe, that was part of our submission early on. We are putting approximately 240,000 or 250,000 tonnes of beef per year into the UK. In the event of no deal, if the UK decides to do a deal with South America, that will be another 240,000 tonnes coming in. Our clear position on that is the current Mercosur deal should be suspended. Europe cannot take another 40,000 tonnes coming in. In the event of no deal, I will ask the European Commission to immediately suspend all beef coming into Europe. I am getting support for this in Europe.

Regarding the buying of cattle in the South to go North, again, we are having serious negotiations with our counterpart in Northern Ireland. It wants that trade to continue after Brexit. What farmers in Northern Ireland do not want are carcases coming into Northern Ireland because we all know that if the meat industry is bringing in carcases, there is no guarantee they are coming from Roscommon or Tipperary. Farmers in Northern Ireland are very interested in continuing and expanding that trade. That is very important, which is why that North-South trade will be critically important in the future.

Regarding more cattle on the hoof, we did meet another agent that wants to export more cattle to Libya next year. The more cattle we can get out, either calves or on the hoof going to Libya or other places in North Africa like Algeria, the better but we have a market just up the road. We need to concentrate on and put as much effort as possible into that. What farmers in Northern Ireland want to see is those cattle going up and being processed in their plants. There is a huge opportunity for Northern Ireland cattle to go over to the UK and supply that market while cattle from the Republic of Ireland could supply the domestic market in Northern Ireland.

Mr. Tim Cullinan

I do not know what the exact tariff is but if the Northern Ireland protocol is in place, and we sincerely hope it is, there will be no tariff with sheep coming from Northern Ireland down south. There will be sanitary and phytosanitary checks on sheep coming from the UK into Northern Ireland.

There will be no tariff on our beef going up there.

Mr. Tim Cullinan

No.

So why are sheep one way and cattle-----

Mr. Tim Cullinan

There will be no tariff on our beef going up to Northern Ireland and there will be no tariff on sheep coming down from Northern Ireland. That is why the Northern Ireland protocol was negotiated in the first place. We want frictionless trading across that Border. We are all clearly saying that the last thing we want to see is a border between the Republic of Ireland and Northern Ireland.

What will happen with ewes coming in from the UK? Will there be a tariff?

Mr. Tim Cullinan

There will. There should be.

Mr. Roddy was looking to speak but he seems to have vanished from our screen for some reason so Mr. O'Donnell might answer the question.

Mr. Henry O'Donnell

I do not know what happened with Mr. Roddy. He was there until the last minute. In order to keep our market at home relatively stable, we must move these calves so any possible alternative needs to be investigated. Mr. Cullinan mentioned that Teagasc is doing work on that. It needs to investigate that fully as quickly as possible. Regardless of whether we are sitting here discussing Brexit or anything else, it is very important that these calves are moved out of our system. If not, it will put even more pressure on our beef industry, which is returning little enough for farmers at present.

Regarding trade between North and South, what we need is clarity on how the Northern Ireland protocol will work. If we have been promised a frictionless border between North and South, that is what is needs to be. Lambs need to be able to come from Northern Ireland, be processed and be sold anywhere as Irish lamb - and I mean anywhere in the world.

We need clarity on that. We also need clarity on the possibility of livestock coming from Britain into Northern Ireland and what will happen those animals. We cannot have that as a mechanism to undermine our own industry in Ireland. We need clarity on how that is going to be done. Everybody knows that the live trade of cattle from the South to the North has increased substantially recently. As to whether that is pre-planning or pre-stocking for Brexit, nobody is giving me very clear answers. From a farming perspective, whatever happens with Brexit, we need that facility to be allowed to continue.

As I said earlier, I still have some concerns with our processing industry, which is very active in Britain as well as in Ireland. We cannot have our primary producers manipulated in such as way that the only people who make any profit from the beef industry are the processors. Whatever protocols are put in place need to be cognisant of that, so that farmers do not fall foul and be the ones in the middle and who yet again lose out as the primary producer with no power over the produce we actually produce. Perhaps I might hand back to Mr. Roddy now.

I will first have to move to my next questioner.

I welcome the witnesses and organisations and I thank them for their written submissions, which are very helpful. I will be brief because I am aware that time is against us.

As for where we are with the preparations for a possible hard Brexit, what are the witnesses' views on whether the actual agri-food industry is prepared for it? Are we prepared to have a dramatic tariff put on beef and on the dairy industry? How prepared are those sectors for finding different markets? We are 25 days away from a doomsday scenario that will probably have the greatest impact on Irish agriculture since the 1950s. How do the witnesses think the food industry is prepared for that doomsday scenario? I have spoken with colleagues of mine in the UK in the past few weeks about the sentiment of the UK market regardless of whether we have a good or a bad deal. Do the representatives have information on the sentiment of the UK customer moving against the Irish product or the EU product? Taking into consideration these dragged-out talks with deadlines moving continuously, there has been great unease within the UK public about this. They have eventually bought in to where Brexit is actually going. Do the witnesses believe there could be a backlash towards the Irish product, regardless of whether we have a good deal or a bad deal? How could such a backlash affect the industry in Ireland?

Mr. Tim Cullinan

As to how prepared are we, that is a very good question. We have heard consistently from the Minister, Deputy Coveney, that we are prepared. Personally, I have concerns around how all of this is going to work. The Senator is right. Obviously, a lot more people will be needed for the issuing of certificates for export and there will be IT systems all around that also, so I sincerely hope that we are prepared. I have been asking this question for quite a while. I am told that there are more facilities here in Dublin Port and in Rosslare Europort. This is what we are hearing from the Government so I sincerely hope that is the case.

With regard to the agri-food industry, we will find alternative markets for the dairy sector much faster than for the beef sector. I am sure members are aware that a substantial amount of dairy produce is exported to Asia and throughout North Africa and all over the world. There is a more diverse portfolio of exports from the dairy sector than from beef. That is important. There is no point in saying anything else. It is a very disruptive process that has been foisted upon us and is not of our making.

The larger milk processors were developing a joint venture of a cheese plant in Waterford and it is very concerning that while they had obtained permission to build that plant, An Taisce has got leave for a judicial review around that. This is something the Government needs to look at. This Irish company, in a joint venture with a Dutch company, is building a plant to get Brexit ready. It is a €200 million project. Here we are this year in a country where unemployment hit 26% at one stage, and it is still at 16%, but a company that wants to invest €200 million finds that An Taisce is holding up the project. This is concerning from the dairy sector's perspective.

On the sentiment of the UK market, we have been doing a lot of work with our colleagues in the National Farmers Union in the UK, and with our colleagues at the Ulster Farmers Union in Northern Ireland. From a farming point of view, they would much prefer to see beef coming from Ireland or Northern Ireland into the UK rather than seeing a trade deal that will bring cheap beef from South America into the UK because if that happens, the British farmers know that their market is gone. I looked at the figures just last week and the British market has consistently returned 35 cent a kilogram ahead of the price in Ireland. It is a very important market. They want to maintain that price for themselves. The only way they can maintain it is if the beef is coming from Ireland.

As for the consumer, I have spoken with some of the major retailers and they want a plentiful supply of Irish beef going in there also. In that space we are working on developing a premium product. I believe there is no better premium product than the suckler brand. I am sure the Deputy is aware that Bord Bia has agreed, and together with the Department, we are in the process of setting up a group to establish a brand around suckler beef. If developed, that brand could create a premium and get it into the higher end of the market. This will all be a challenge but this is where it is at the moment.

Mr. Cullinan raised the issue of objections to a plant being developed by one of our processors. I raised a Topical Issue matter on this a few weeks ago. While we must respect the right of every citizen to object to a project, this had gone through An Bord Pleanála, which upheld the application, and a judicial review is now being used to delay decisions on it. We have to ensure that the judicial system cannot be used to delay a venture such as this, which is trying to diversify our markets. Every organisation has a right to object but we have to make sure that our system is streamlined in order that objections can get through the system in rapid fire.

Mr. Vincent Roddy

On the last points raised, I will pick up from Mr. Cullinan's comments on the public sentiment, the impact of Brexit and how the British could view it. Currently Britain does need beef, so we have to recognise that. Whatever the sentiment is or is not, they will still need food. Ireland is best placed to put that in there right now. Going forward, however, there is the long-term concern that they may move towards other countries. Mr. Cullinan raised the point, which we have also pushed, on the development of a naturally reared suckler beef brand. This has huge merit and especially in the UK. It will also have massive merit right across Europe.

In response to the point about sentiment in the UK, as Mr. O'Donnell has previously outlined, we have one advantage that most other operators into Britain do not have, namely, the first, second and third generation Irish. While most of them identify as English, they still have a loyalty to Ireland and to Irish products and that is something we can benefit from.

A hard Brexit is a major concern. We hope it does not happen but if it does, we must put in place proper supports for farmers, including direct supports and supports for intervention if necessary. That will have to happen. In the event of a hard Brexit, we also need to look at the impact on British beef and lamb going to Europe. Currently, approximately €500 million worth of British beef is going into Europe. I know it is lower end cuts but there is a potential for us to make a play for that. In addition, more than €400 million worth of British lamb is going into Europe. That is important but I come back to a point that has been raised over and over again, which is the need to make sure we can get the product to the market in time. That is the reason the land bridge has worked quite well but, unfortunately, it is going to present major problems whatever happens on 1 January.

We need more ferries. We welcome the fact that a ferry has been put in place between Rosslare and Dunkirk, but we believe that we need more. We believe Rosslare is the best port to use. More ferries are needed and they must be put in place. Currently, the exports from Ireland into the UK are worth €3 billion a year. That is between meat and dairy produce. Some 85% of that goes through the land bridge and that is not going to be possible from January.

Mr. Bryan Barry

I think we should be clear, because we need to convey the seriousness of the situation. We are 14 working days away from 31 December. The best-case scenario is that we get a free trade deal and the best-case scenario is a hard Brexit. The best-case scenario is a significant deterioration in the terms of trade with the UK, with the British market, which is the market for half of our beef. We will have higher costs, greatly increased bureaucracy and significant difficulty in the other areas in terms of the land bridge. We are going to have these difficulties anyway.

The worst-case scenario is no deal. Mr. Tim Cullinan, our president, has described it as Armageddon. That is a total disaster zone. That is how serious it is. Even in the best-case scenario of a deal, we will need access to the €5 billion Brexit reserve fund that we lobbied strongly for. The Minister for Foreign Affairs, Deputy Coveney, and this Government and the previous one pressed strongly for that and brought it to fruition. We are going to need support from that fund in the best-case scenario. There is no doubt about the fact that we are going to be faced with significantly increased costs. It is just a matter of whether they are going to be relatively limited, within the goodwill of a free trade agreement or whether agriculture ends up in Armageddon territory. We need to be looking at the possibility of support coming in early next year, even in the context of a free trade agreement, for the kind of disruption that will happen.

We know that some of the bigger players in the industry have worked hard to put stock in store to try to get over the initial period, but we are going to face into a situation where the terms of trade are different. Even under a free trade agreement, down the road, we can see our position in that market potentially being eroded. That is why the level playing field is of the utmost importance. In a free trade agreement, and in the current negotiations, it is important that the UK is tied in as far as possible into current standards, as well as into standards as they evolve in the environment and food safety areas, among others, in order that it cannot undermine the value of its own market and pursue a cheap food policy, which will affect us and displace us out of the UK market. This is what I am talking about in the context of a free trade agreement. That is what it has to be.

I have questions for both groups of witnesses. I will start with the IFA. I welcome the presentation. In 2016, the UK voted to leave. In the view of the witnesses, did the Government, Bord Bia and even the IFA prepare and fight hard enough at that stage for what was coming down the road? From the word go, we were told about all the pitfalls. Mr. Cullinan said that he made it very clear to the European Union that a deal was going to be done at the expense of Irish farmers. In a no-deal Brexit, Irish farmers are going to need all the support they can get. It is frightening to think that we are waiting until the eleventh hour to make that point clear to both the European Union and to England.

The witnesses mentioned that we export 44% of beef, 40% of cheese, 100% of mushrooms, pig meat and lamb. Will any particular sector be affected most by Brexit that would need more Government supports than others? What way will farms have to change in order to deal with the demands of the environment due to Brexit? Are we looking at the development of large-scale farms, which will severely affect small Irish farmers? The likelihood is that the farming landscape will change. What are the views of the witnesses on that?

The following questions are for the INHFA. In talking about the development of ports, reference was made to how politicians and the national media have been primarily focused on Dublin Port, to the detriment of the ports in Cork and Rosslare. To what extent are we undervaluing and underutilising these other ports? Are the transport routes to these ports adequate? Do the witnesses have any suggestions on developing transport across the country to facilitate the new way of doing business after Brexit, such as getting to the ports? The Chairman is aware that one of the biggest worries in Tipperary is that all the extra traffic will go through Tipperary town and that the N24 will not be able to cope. My concern is that a small town in Tipperary is going to start getting extra traffic that is going to the ports.

Has there been progress on the proposal to develop the naturally reared suckler brand? That was suggested by the beef task force. Surely that would be something worth pursuing, regardless of the prospect of Brexit.

Quite a lot of the issues I was going to raise have been touched on. I welcome the organisations here today. With Brexit looming, in their estimation, which is the most exposed sector in terms of the risk in agriculture? A lot of discussions are going on at the moment and there is a savage focus on fisheries. Last week, Michel Barnier was offering 18% more of Irish fish stocks to the UK. That is quite serious, and I do not think that point has been picked up at all by the State. Are we just going to blindly go along with it and let our fishing industry go under? Are we offering 18% of agriculture as well? If we are, then will the 20% of lamb that we export be reduced to 2%? Where are we going to lose out most? Companies such as Carbery Group Limited in Ballineen, in my constituency, which is a great employer, has done much work in recent years to prepare. Are many companies prepared for what is going to happen next?

The question as to whether we have access to new markets has already been answered. Mr. Cullinan referred to flying calves to Belgium and such countries. Is there access to new markets for cheese, and probably the pig and lamb sectors as well?

I will be brief. I welcome the delegations to the meeting. We are talking about being prepared. This is something new for everybody. No matter how well we are prepared, there will be very serious problems. Farming organisations and farmers, particularly in this country, need the support of Europe on this occasion. Everybody is talking about the effect it will have on Ireland, but Britain exports many goods to Ireland. There will be a knock-on effect in that regard. I hope there will be a deal because farmers have suffered enough in recent years. The situation at this time might not be perfect but the cattle and sheep sectors are both going a little bit better than they were. We were prepared and we were sending a significant amount of beef abroad. I hope that Bord Bia, the Government and everybody else are out there looking for new markets.

Mr. Cullinan is correct that if there is a no-deal Brexit, there will also have to be no deal in terms of food being imported into Europe on top of the deal that is already in place whereby food may be brought into Europe. What we cannot allow to happen is for companies from outside the EU to start exporting cheap food to Britain, which would affect Irish farmers. If the rest of Europe stands by on that issue, we are the ones who will suffer most. We must ensure that Europe is 100% behind us and supportive of us. It will have to be supportive of Irish farmers, particularly in terms of funding. I know there are several schemes. The French are looking for funding and everybody else will be looking for it, but we will be the ones affected most by this and we need the support of both the Government and the European Union to ensure they give us the funding we need. I hope we are ready. We do not know what is coming down the line; nobody does. No matter how well prepared we are, we just do not know what will happen.

If there is one thing they are good at in Europe and we are good at in Ireland, it is bureaucracy. By God, if we are going to have more paperwork and more hold-ups at ports and elsewhere, we have a serious problem coming down the line. If there is one thing we are good at, it is paperwork and holding people back. To give a simple example, who did the Garda Covid checkpoints set up at the behest of the Government affect most in recent weeks? As other members will verify, ordinary decent people travelling to work or coming home from work in the evening were held up for an hour and a half. Those are not the people who should have been targeted. I am afraid the same thing will happen if there is a no-deal Brexit. Let us all hope that a deal will be done this evening or tomorrow. That is important for Ireland, Britain and Europe. The British are exporting many goods into this country and I hope we will be ready to take a strong stand against them as well.

I ask Mr. Cullinan to reply as briefly as he can.

Mr. Tim Cullinan

Deputy Browne is correct. The UK voted to leave in 2016. He asked a straight question, that is, what was the IFA doing about it. We were centre stage and out front before any Government or other organisation. We held a conference in Goffs, County Kildare. It was attended by Phil Hogan, the then Commissioner for Agriculture and Rural Development. We explained to him how serious the situation was. The IFA has the benefit of being linked to COPA-COGECA in Brussels. We have been highlighting the issue there. To be honest, the Deputy is correct. We wish to be clear that we are a small nation on the periphery of Europe. We are the country that will be most affected by this. The IFA has been highlighting that since the night of the Brexit vote. We have seen the consequences that can occur. We are seeing that playing out this evening again. I do not know what the Government was doing. It was probably slower off the mark than the IFA was. In fairness, I suppose it was difficult for the Government because the negotiations are between the UK and the EU. That is still the case.

The Deputy asked which sector is most affected? An important sector in the Deputy's part of County Tipperary is the mushroom sector. The mushroom trade was wiped out at an early stage. All sectors in agriculture will be seriously affected, but the mushroom and beef sectors are the two critical ones that will be affected.

As regards big farms, this has nothing to do with being a big farmer or a small farmer. It will affect every farmer straight up.

The Deputy referred to the suckler brand and asked where that is at with the beef task force. It was agreed in principle that a stakeholder group would be set up by the Minister to drive this new brand for beef. There will be a meeting of the beef task force. My understanding is there will be another meeting next week. I will be taking up the issue at that meeting. My understanding is that the group must be set up at the next meeting and it will start implementing measures around developing that brand going forward.

Deputy Michael Collins asked almost the same question regarding which sector will be most at risk. He asked about cheese. I know that one of the larger retailers in Ireland was processing Irish cheese in the UK but it has diverted it back to Deputy Collins's county. That cheese is being processed in Cork as we speak.

I do not represent fishermen but I do represent the aquaculture sector. It is another sector in respect of which there are many issues. We will not get into that this evening. The fishery sector has been sacrificed for many years. What is going on there is concerning.

Deputy Ring made the point that farmers need support from Europe. We have been front and centre on that issue. I was one of the people lobbying in Europe for that funding last summer. As I stated, very few other member states were doing so. It is important that the message be taken from this meeting of the committee that there were two countries seeking that €5 billion, of which we were one. The IFA was centre stage with the Taoiseach last July in that regard. We have to ensure as much as possible that the money is ring-fenced for Ireland. In the European Parliament last night there was significant support from other member states for our situation, which is very important. We want to work on that.

On the issue of the cost of food, Deputy Ring raised a very important point that I raised yesterday. There are imports coming into this country. We are all going to suffer; it is not just farmers who will suffer. Every citizen of this country will suffer because of Brexit. Once there are restrictions on product coming into the country, the cost of food will only go in one direction. If a product is scarce, all present know that it will cost more.

On the role of the Government, the state aid rules were lifted during Covid. That has to be continued because the Government is going to have to put its hand in its pocket and co-fund money we are getting from Europe. This situation is going to cost billions of euro. The cost for agriculture alone will be €1.5 billion for agriculture per year.

I agree with the Deputy regarding paperwork. The last thing any farmer wishes to see is more paperwork. It is absolutely essential that it is kept to a minimum.

On the issue of standards, that goes back again to the level playing field. We have been consistently lobbying on this issue. In fairness, our colleagues in farm organisations in the UK and Northern Ireland have asked me specifically to help them lobby on standards. We were trying to get that message driven home from the very start of this process.

My final word on this is that the key issue is that, obviously, we wish to see a deal being struck. We are very concerned by the situation as of this evening. If we do not get a deal, funding will be absolutely critical for this sector going forward.

I invite Mr. Roddy to reply to the questions as quickly as he can.

Mr. Vincent Roddy

On the points regarding Dublin Port, it has become a bit like the Dublin Gaelic football team in that it has become the dominant player. We need to consider developing the other ports. There is no point saying otherwise. In the event of a no-deal Brexit, or any Brexit, we will definitely need the other ports. Rosslare is the obvious choice. I understand the access into Rosslare Port is quite good. That is what hauliers have told us. Rosslare is the obvious one. Cork is another option but the connectivity into Cork Port in particular may not be as good.

We definitely need that motorway from Cork to Limerick. That would help because it would open up the entire western corridor. As regards the point on the naturally reared suckler beef brand, as Mr. Cullinan has said, there will be a meeting of the beef task force on this issue next week. The beef task force will be working on it. The plan is to set up a committee to put in place and oversee that brand. The Deputy is absolutely right; that needs to happen regardless of Brexit. It probably should have happened a long time ago. It is something from which we can benefit in the UK market, as we have said, but also in the European market and, possibly, beyond.

On the point Deputy Michael Collins made on the comparison between fisheries and agriculture and on what is happening in that regard, we obviously need to ensure that proposed cut of 18% in the quota for fisheries is not replicated in the farming industry. I also imagine that cut is not wanted in the fishing industry. The Deputy mentioned other markets. Clearly, we need to look at European markets but we also need to look beyond. I know a number of trade delegations have gone to China and other places to develop other markets but that Irish in England is a massive asset and it is time to play that card strongly, especially through the use of brands such as that of the naturally reared suckler beef.

Fair play to Deputy Ring; he is absolutely right. Farmers do need that support. There is no doubt that we need direct and indirect support for products when required. As regards paperwork, from talking to hauliers we know that the compliance measures that will be in place after 1 January are going to be a nightmare. I encourage people to talk again to the hauliers. They have some suggestions as to how some of these requirements could be made more manageable. I encourage people to do that.

I thank the witnesses. We will suspend to allow our next witnesses to come in.

Sitting suspended at 5.12 p.m. and resumed at 5.17 p.m.

We are very restricted with Covid and we are under time pressure. As witnesses will see, the seating arrangements are strange to say the least. We have to keep very well spaced out. I welcome from the Irish Co-operative Organisation Society, ICOS, Mr. John O'Gorman, chairman of the ICOS dairy committee; Mr. Eamonn Farrell, food policy executive; and Ms Alison Graham, European affairs executive, who is joining us remotely from Brussels. From Meat Industry Ireland, I welcome: Mr. Philip Carroll, chairman, and Mr. Cormac Healy, senior director. From Dairy Industry Ireland, I welcome Mr. Conor Mulvihill. I thank them all very much for attending today.

Witnesses are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person or entity by name or in such a way as to make him or her identifiable.

Witnesses participating in the committee meeting from a location outside the parliamentary precincts are asked to note that the constitutional protections afforded to those participating from within the parliamentary precincts do not extend to them. No clear guidance can be given on the extent to which their participation is covered by absolute privilege of a statutory nature.

We will take the witnesses' opening statements as read and conduct a question-and-answer session with the members of the committee. The three organisations present represent different sectors so if a question is only relevant to one sector whichever organisation it suits best will answer. Some of the questions will apply to both sectors.

I welcome all our guests and thank them for taking time out from what is a pivotal moment for the future direction of Irish food. The next number of hours, days and weeks will have a huge impact on the agri-food sector in the broadest sense. I will try to be as brief as possible with my questions because a number of speakers want to come in and there are questions with the Minister shortly in the Dáil.

My first question is for both ICOS and Dairy Industry Ireland. In their submissions, they indicated a number of schemes and supports that are required in order to support their industry, particularly in a no-deal scenario. I take it that a number of them will be required even if there is a free trade deal because that would not be as free as what is currently there. I see proposals relating to export credit insurance, labelling and existing and future EU trade agreements. Considering that we are a month from the deadline and the issue of Brexit has been going on since 2016, to be generous, how far on are we in respect of these proposals? In other words, are the witnesses confident that the measures their sectors need have been put in place by the Government and the European Union in order to protect them?

My next question is for Meat Industry Ireland. One of the biggest fears I hear is that farmers will be caught in the middle and the outworkings of Brexit will be manipulated as regards prices. What measures is Meat Industry Ireland putting in place to protect the prices it pays farmers going forward? What reorganisation measures is it putting in place in order to ensure the stream of Irish food that comes through its factories is sold on the international market to garner the best possible price, and that that price is in turn passed on to the farmers, the primary producers? I refer in particular to the short-term implications. Can we be assured, come January, that we will not see a severe drop in the prices being received from factories?

As regards the structure of the meat sector, and considering the sizeable potential impact Brexit could bring about, have there been any discussions at a macro level within Meat Industry Ireland about the industry playing a patriotic role and contributing back to our society? Do Meat Industry Ireland's member companies intend to remove the structures whereby they are registered in places like Luxembourg and other third countries and revert back to Ireland? Meat Industry Ireland's opening statement mentioned that the sector directly employs 16,000 people. Of course, every job is welcome. Of those 16,000 people, how many are employed by agencies? Does the organisation intend to encourage its members to redirect their emphasis so that these workers are directly employed in meat plants in our communities?

Mr. John O'Gorman

I thank the Deputy for his question, which is very relevant. From a dairy industry perspective, there is huge exposure to the UK market, especially in the context of the cheddar cheese side of the business. As Members are probably aware, about 6.7 billion l of milk are produced in Ireland every year, of which about 700,000 l are consumed domestically, and the rest has to be exported. Approximately 2 billion l of that milk would go into cheddar cheese production alone, and 60% of that goes to the UK. The Irish dairy industry is hugely exposed to the UK market from a cheddar cheese point of view alone. It is natural that the UK market was a target market for the Irish dairy industry traditionally, as we share the same values, the same culture, the same language, the same food tastes and so forth. Cheddar cheese would be regarded as UK-type cheese and there is a limited market for it outside the UK. That would probably be the biggest exposure for the Irish dairy industry in the UK market currently.

A hard Brexit would lead to tariffs somewhere in the region of €1,670 per tonne. To put that into perspective, 13,000 tonnes of Dairygold cheddar go into the UK every year, out of a total production of about 50,000 tonnes. That would equate to about €50 million, which is equivalent to Dairygold's earnings before interest, taxes, depreciation, and amortization for 2018. That is a stark figure for our members, farmers and milk producers and shows how serious this is from an Irish perspective.

We have been led to believe that a soft Brexit would mean tariffs of around €200 a tonne. Outside of the financial tariffs and so forth there will also be costs to transport a product, the delays and the complexity around what has been a very free-moving industry, with 24 hours from the time something is loaded to when it is unloaded in the UK. We are expecting to add at least eight hours to that and that would be in a good outcome. That adds further complexity and further cost to an industry that is ill-equipped to absorb it. The processor works on quite low margins and the consumer is unlikely to absorb the cost, so the person who will be asked to absorb it is the primary producer. That is the fear my members would have.

The Deputy asked what could be done from a Government perspective to try to smooth this over. Export credit insurance would be a great help to the industry as we try to diversify into new markets with new products and so forth. From a production and logistics point of view, capital investment programmes wold be helpful as we try to diversify from cheddar cheese. The UK market will still be a very important market for us going forward but the expansion in milk production that has happened over the past few years is done at this point so it is now about adding value to that growth. As we try to add value to that, there has to be product diversification but also market diversification. Support in that regard would be of great help. My colleague, Mr Mulvihill, from Dairy Industry Ireland might look at this question as well.

Mr. Conor Mulvihill

To answer the Deputy's questions on export credit insurance, we export 95% of our dairy on an all-island basis and we have been requesting export credit insurance because of a derogation of state aid law in the European Union. We are the only major exporter in the European Union without state-led export credit insurance. To be fair, the Government and the Department have done Trojan work in preparation for Brexit but, to be blunt, this is the one big gap from our perspective that has not been adequately answered. Competitiveness-----

The only one in the EU?

Mr. Conor Mulvihill

The only one of significant exporters. We think only three other countries in the EU are without a state-backed export credit insurance scheme. It comes down to one word: competitiveness. We are expected to diversify from the British market and engage in hand-to-hand combat with our colleagues across the EU, including France, the Netherlands and Denmark, into new markets but they have export credit insurance and we do not. Our issue falls between two stools. It is a Department of Enterprise, Trade and Employment competency but we are dealing more with the Department of Agriculture, Food and the Marine. We are calling on the committee to energise our work on export credit insurance.

The island of Ireland dairy industry is unifying. It is Ireland's model all-island industry. We have an exposure of approximately 4 billion litres of milk in all-island dairy products. The developments between the Secretary of State, Michael Gove, and Commission vice-president, Maroš Šefcovic, on the implementation of the Northern Ireland protocol are very welcome. If there is a deal, we must move forward very quickly in getting all-island dairy product recognised in European free trade agreements, FTAs, and also to have the access to private storage aids and intervention for those products in case of market crisis. We would really appreciate the committee's support on that.

Mr. Philip Carroll

I do not think anyone doubts that the meat sector is by far the most exposed sector by a no-deal Brexit. It is exposed by Brexit in any case but the fundamental problem that we will face from a no-deal Brexit is a tariff wall. That will be absolutely massive and substantial. We have no line of sight on what that is likely to be. We know, for example, that the UK produced a tariff schedule last year and a further tariff schedule this year. The one this year is more acute and more damaging than the one produced last year. Those tariffs are highest in the meat sector. To give any indication of what would happen in the marketplace on 1 January would be crystal-ball gazing without knowing the what the circumstances of the market will be.

If one looks at where we export, the UK market is our biggest market by far compared with any other single market in the world. The reason is because it is close and because it pays the best prices in the market and has significant demand at retail level and at food service level. The volume that goes in is 47% to 49% of total volume and total value of exports in any given year, approximately €1.7 billion or €1.8 million in value annually. Beyond that, the largest proportion of our products is going to the continental market. Approximately 44% is going into that market, that is the larger consumer countries, such as France, Germany, Italy and some of the Nordic states taking a significant slice of that. Internationally, the market that we were really looking to was the Chinese market and it is now closed, which is a problem. A number of different factors are converging.

On the measures we have put in place, any company in our sector is Brexit prepared insofar as that is possible, but we cannot be prepared for a no-deal Brexit because that is the existential crisis. In that scenario a massive value, around 70% of the market value, will be sucked out through tariffs. The product will be shifted out of the market and given to the exchequers of the UK and Europe. We are suggesting that we need a mechanism that in some way draws that in so that the sector is supported. What we really want is to retain our market share in the UK. If we do not, the diversification is not available to us at this time to shift the product into other markets. If we do have to shift it in volume terms, we could also cause some degree of chaos, certainly disturbance, in the other largest segment of the market, namely the UK. We face a problem in that regard. We need a tariff mechanism that rebates the tariff that comes to the Exchequer back into the marketplace, that maintains our competitiveness in the UK market and maintains the equilibrium that we currently have in the market. I understand our position with the Government. We have spoke to the Government on this time and again, and have been talking about it since 2016. We understand that until the negotiations are finalised, there cannot be a clear line of sight as to the type of support mechanisms that it might want to make available. There are two significant funds available. One is the national Brexit and Covid fund of €3.4 billion, which is available between now and 2024 and the more significant fund is the European Commission Brexit adjustment fund of €5 billion. They are the mechanisms, as well as the tariffs, that come into the exchequers, which can reverse the revenue back into the marketplace to support us for the period it will take for the market to reach its normal equilibrium. The only other way that will happen is if there is some sharing of the cost of the tariff, that is, that there is some price elasticity in the UK market such that there will be an increase in that value. It must be borne in mind, however, that if there are tariffs there is also competition. The South Americans who are exporting, and doing so competitively, at the high tariff rate that currently faces them in putting product into Europe, they will get an immediate competitive bounce from Brexit because the UK tariff is somewhat lower than the European tariff. They will be even more competitive in the UK market, and they are ready and prepared to take a slice of that market. I cannot tell the Deputy with any degree of certainty what the market profile will be in January 2021.

He asked one other question that I would like to answer, which we repeatedly answered at the Covid committee hearings. The answer was 2% in respect of workers who were employed through agencies. Our members' view is that 2% should be heading towards zero.

What about company structures?

Mr. Healy wants to say something.

Mr. Cormac Healy

To pick up on Mr. Carroll's point, as far as MII members are concerned, it is an industry based on full-time direct employment. The figure of 2% through agency is what is represented in a full workforce. The figure is decreasing and, I believe, will continue to do so.

Mr. Carroll has spoken of how preparedness around no deal and the type of tariff wall that will exist. We are all aware that there are many other issues that will arise around trading conditions and requirements in the context of Brexit. From the meat sector's perspective, companies have been preparing for customs have a certain degree of knowledge on that area given experience of trading with international markets, are looking and have been putting more consignment through the direct shipping route between Ireland and the Continent. That is an area of real concern - what will happen to the product we are sending to continental Europe? Some 90% of current consignments would go by the land bridge but all sorts of disruption are forecast for that. They are trying where there is capacity available but it remains a major issue. We do not believe, even with the new and welcome announcements of new shipping routes direct to the Continent, that come January one way or another there will not be sufficient capacity to take what would be displaced from a land bridge perspective.

We are working on details of how that can be streamlined as much as possible.

I have a few quick-fire questions with little comment. I thank the three sets off witnesses who are here this evening to answer our questions. I have gone through all the submissions. We have been discussing this topic for four years, so much of it is not new. I want to elaborate on two points from the ICOS submission and then bring the others into the equation. Of all the groups to appear before the committee in the two sessions this evening, ICOS is probably the only group involved in importing as well as exporting. I ask the ICOS witnesses to elaborate how we will be affected on the import side. The conversation seems to be dominated by our exports, but what complications might arise affecting imports?

The ICOS submission stated that the erosion of the UK consumer spending power would have a major impact. I ask all three organisations how they see that. Even in the best-case scenario, the UK does not come out of this smelling of roses. We all know that the consumer shops with their purse. They used to say the housewife, but we need to be careful with that now. It is the housewife or the house husband who shops and I cannot even mention the purse. They shop with their available housekeeping and their disposable income. If this does not go well for the UK, what contingency plans are in place regarding the type of product, and in the case of MII the type of cut, we export? The type of cut or the part of the carcase that is being sent to the UK may change. The bestseller over there now may not be the bestseller in future if the consumer does not have the same disposable income.

While this is not directly Brexit related, it may help us with increasing markets. I ask the representatives of MII to comment on protected geographical indication, or PGI, status. How might having that status help meat companies to explore new markets or maintain the ones we have?

We have had much conversation about live exports and issues with lairage for calves. Have MII members ever considered sending calves on the hook as opposed the hoof? Could we possibly get into the veal side of things from a processing point of view? It may solve some of the problems we have with live exports if it went out on the hook as opposed to the hoof.

I ask the ICOS representatives to elaborate on part of its submission. The Northern Ireland protocol aside, ICOS seems to believe there may be an issue in the small print of existing free trade agreements between the EU and third countries which may see Northern Ireland product as a third country product. While with the Northern Ireland protocol we are trying to maintain an all-island approach and milk will be able to cross the Border as far as we can see, the ICOS submission has suggested there may be a problem in the small print of existing third country FTAs which may not recognise the Northern Ireland milk or product as EU product. They may see that as third country input and that could have consequences for existing FTAs the EU has. I ask the representatives of DII and ICOS to comment on that.

I welcome all the witnesses. My first question is for the representatives of MII. A lot of cattle have crossed the Border in the past six months. Does MII represent both sides of the Border or just one side? Do they envisage that production will be ramped up more in the North in light of the Northern Ireland protocol and that in the event of a hard Brexit more cattle would travel on the hoof?

What factories does MII represent? I understand that all the large processors here have factories in the UK. How many factories do they own between them in the UK? Is it helpful to us that they are operating on both sides of the Irish Sea?

We know that many sheep have come across the Border and sheep have come from England; let us call them the cast ewes. Obviously, that will incur a tariff if there is a hard Brexit. Will that be a problem?

I presume the dairy sector needs to get more calves out on the hoof because if not, we will certainly have a calamity here. As Deputy Carthy pointed out, farmers fear that if there is a backlog of cattle, we clearly know what happens to the price for the farming community.

I may be wrong, but on exports I note that the tariff on cheese is lower than on milk. Why is there such a tariff discrepancy on different items?

Do the witnesses or people from their organisations go to Europe to talk to the different representative bodies? Have they spoken to MEPs about meat? Representatives of the IFA and INFHA have appeared before the committee. Europe is importing beef and there is the Mercosur deal as well as other agreements. Would the witnesses favour a proper pricing intervention if in addition to tariffs there was to be a big sudden shock preventing us getting into the UK? Have they considered looking at that to alleviate the problem straightaway?

Is MII disappointed with the tonnage of beef that has gone to China? It seems to be an unmitigated disaster compared with the amount of beef going out to those countries two years ago which would have probably helped us alleviate things. I know that Brazil is sending a good bit in. Are the witnesses disappointed with those markets? Should Bord Bia be doing other things?

A question was asked earlier about the suckler PGI status. If we get suckler PGI status will there be a greater premium price for that if it is marketed properly?

Mr. Cormac Healy

We were asked about consumer spending in the UK and a possible no-deal scenario. We are all living with a pandemic and the impacts that has had on segments of the market, particularly food service. A no-deal scenario that causes major economic difficulties for everyone on both sides, in the UK and in EU member states, obviously will have an impact on disposable incomes. We will have other issues with even trying to get in there in a no-deal scenario. We have already seen a significant consumer shift towards purchasing increased volumes of mince. Mince now accounts for over 50% of all the meat sold through retail and consumed in the UK. I do not envisage a significant shift in the types of cuts. There will be a substantial volume of mince, rounds on a periodic basis and steak cuts hopefully throughout the year, but particularly during the summer.

What should we do when faced with lower consumer spending? We constantly look at diversifying markets. Our future is still strongly based on trying to hold on to the UK market, service established EU markets and wherever possible broaden our horizon on international markets. That work has been ongoing and some of it ties in with the question from Deputy Fitzmaurice on China. My real disappointment is the suspension of the meat plants with China.

We are working with the Department to try to have that lifted. It was developing. Any new market will take time to build up, to find out what it is they actually want and where is the sweet spot. Progress was being made there but we have been hit since May this year with a suspension that has not yet been lifted. Apart from the immediate situation of that product not going there, it also raises vulnerabilities and questions in the market as to the security of the supply. It puts us out of the market when we are trying to build our position. There is disappointment at the fact that has not yet been resolved and that we are not back in there, and we certainly need it now and in the new year.

On the wider diversification piece, we are looking at markets such as South Korea, Thailand and so on, but they are extremely time-consuming and slow in terms of progress because of veterinary issues and agreement of protocols. We have to continue working on them.

The Deputy raised the issue of Bord Bia. As I said, our position is to try to hold on to market share in the UK. It is one of the best beef markets. It is a deficit market and it has to be the objective in terms of anything we do. We continue to see that it is where work should be concentrated in terms of Bord Bia working in the UK, as well as working in established EU markets and building our premium level of penetration in EU markets. Then, wherever we can, we should try to build a presence in international markets. That is where we want to see the work continuing to focus.

Around the calf situation and whether the industry had looked at veal, I do not think it is an area where we can develop. There are a number of veal producers in Europe but it is quite limited, although the Dutch in particular are seen as a major exporter of veal around Europe. It is not something where we can necessarily build up a position overnight, or in any kind of medium term. Our strong point is the traditional, mature, grass-fed, steer heifer beef. I do not see it. Some elements have been tried over the years but I do not see it as a position for our member companies to go to. It does not seem to be on their horizon. Some efforts have been made at it, but it is not an area where we are going to make substantial ground.

On the dairy-beef piece, it is about being able to do whatever possible in terms of the breeding, so the product coming off the dairy herd is as market-suitable as possible. The FTA debate is more for some of my dairy colleagues. Deputy Fitzmaurice referred to “a lot of cattle” going North. I do not have the specific figures but while there has certainly been an increase in the number of cattle going North, it is not big numbers either. If we process 1.7 million cattle here, the increase in the number going there has been very small in that overall context.

I am not sure that, across the UK, whether in Great Britain or Northern Ireland, there are major plans for growth in output. I have not heard significant talk about it. As a market, across a wide range of food areas, they continue to be deficit suppliers despite having a very good domestic market and a 60 million-plus population, so there is still that prize there, hopefully, to be played for. That is why I said our objective has to be to continue to focus on the UK and holding our position there.

The Deputy raised the point about the EU level and talking to people over there. Certainly, we have been doing that from the get-go. One particular point, which he has probably heard made previously, was to highlight the impact of taking the UK market out of the European beef market. The EU-28 beef market, as it is today, is 103% self-sufficient, so it is a market close to balance with a little bit of extra that is being exported. If the UK is taken out of that, the EU-27 beef market on 1 January would be 116% self-sufficient. That is a big surplus and it is a problem. The point we have made is not only on the impact of Brexit, but also that it is an impact for the entire EU market. The problem is not just about Ireland and is not going to stay in Ireland.

In terms of fixes or interventions, which the Deputy asked about, we do not believe the likes of beef intervention or aids to private storage, APS, if I take the question as being on that, are appropriate mechanisms. If our objective is to try to continue to keep beef going into the UK market, and to serve the customers that have been built up in whatever way we can, then something like intervention or APS does the exact opposite of that because it takes the product out. It might seem like it is a solution in that it takes a surplus out, but we have thrown the UK market wide open to competitors from South America and elsewhere to come in on it. We do not believe that those traditional interventions that have been available from Brussels are the solution.

Does Mr. Healy think the South American countries are going nearly at capacity at the moment? From what I know, they are also sending more to China. Does he think they are fit to come in on the English market that quickly? My honest opinion is that there will be a gap and if there was a no-deal Brexit, the UK would have to get meat.

Mr. Cormac Healy

In the short term, purely from the logistical point of view of ramping up and getting product to market, there would be a shortfall. It is also the case that the UK market is a fresh beef market and consumers are used to fresh product. It is processed here and it is over there with a just-in-time delivery service. It has perhaps got too slick in terms of how efficient it is, and that is why one can get shortages in the short term. As to whether they are eyeing the UK market as a major prize, the answer is “Yes”. Will they ramp up in the medium term to see the prize? Yes. Is it just South America? No, the US is looking at it very attentively, and Australia and New Zealand obviously have ambitions there. In time, they can do that. It goes back to the age-old discussion on whether they decide to target it. However, they will not be able to supply fresh mince into it, and that is clearly the case, given their geographic location. However, will they be able to supply more steaks into it than heretofore? If a no-deal is the outcome, on 1 January, given we currently have no tariffs, we will see a massive hike that affects the competitiveness of our product and they will gain. The tariffs they would be used to paying going into the EU are a bit above what the UK has mentioned at the moment.

Mr. John O'Gorman

I thank Deputies for their questions. I might deal with some of the questions and I will then defer to my colleague in Brussels, Ms Graham, and to Mr. Farrell.

The first question was from an import-export point of view. The co-op organisations in Ireland we represent buy products from our members, that is, milk, grain and so on, but we also supply them with competitively priced inputs for their farms, such as hardware, animal welfare products and a wide range of other products. Obviously, if there is going to be an export tariff for anything leaving the EU going into the UK market, anything coming from the UK market into the Irish market will probably suffer the same cost rises. That would affect the profitability of the farmers who are our members. I hope that goes some way towards explaining the point.

On the erosion of consumer spending power in the UK, the governor of the Bank of England said that a hard Brexit could have a more severe effect on the UK economy than Covid is having or will have. That calls out to me that there are very negative consequences of a hard Brexit from an Irish perspective and an EU perspective, but also from a UK consumer spending power perspective.

We are fortunate that Irish food and drink outputs consumed in the UK generally attract a reasonable premium over and above what other products on the shelves attract. The ability of the UK consumer to purchase at a premium will be reduced. Obviously, products coming from outside of the EU, produced to different environmental, animal welfare, labour law standards and so forth, will be more competitive than what we produce.

Ms Alison Graham

On the question of products of mixed milk origin, we are concerned that, even though we are thankful for the Irish protocols in the withdrawal agreement which allow for the continued trade of milk and dairy processed products on an all-Ireland basis, unfortunately, wider EU policy does not extend this benefit to products produced on an all-Ireland basis because Northern Ireland milk falls outside the EU customs union. This means that products produced on an all-Ireland basis, namely, products which contain both Republic of Ireland and Northern Irish milk, will, by and large, not be able to access the benefits of EU free trade agreements.

The rules in the EU free trade agreements effectively state that products which can access the benefits must be wholly of EU origin. There are some exceptions and limited flexibilities. For instance, in the Japanese agreement, there is a flexibility of approximately 10%. These flexibilities, however, tend to be limited and do not give us sufficient space for us to be able to continue to export these products which are produced on an all-Ireland basis.

In addition to that, not only are these products excluded from EU free trade agreements, they are also excluded from EU market support tools contained in the Common Agricultural Policy. Those are tools on which we would rely in times of market crises, such as public intervention and private storage aid.

The EU has enabled this trade to continue on an all-Ireland basis. It should equally support products which are produced on an all-Ireland basis within its wider policies in order that future EU trade agreements which are negotiated contain rules of origin which allow for products produced on an all-Ireland basis to be exported under preference and get that preferential access to those markets. Existing EU free trade agreements should be looked at again to see how we can maintain the current trade in those products produced on an all-Ireland basis and can maintain that access at the preferential rates to those markets. This should be a priority from an agricultural perspective for us going forward. From our perspective over in Brussels, we see that.

We are talking to different European associations. ICOS has been chairing a Brexit task force within the European Farmers and European Agri-cooperatives, COPA-COGECA, for the past three years. Through these organisations and task force we have had close dialogue with the EU institutions and other European stakeholder and industry organisations to put together our concerns, to discuss our preparations and see how we can find solutions. Through this dialogue, we have built up a strong support about the unique difficulties facing Ireland. Many of the proposals which we have presented in our opening statement are ones that we have built together with our European counterparts.

It is true that these market support measures are vitally important, particularly in a no-deal scenario, which, unfortunately, is looking more like a possibility as we count down the days. Market support measures, that is, intervention and private storage aid will be vital. However, our key ask should be that products of mixed milk origin will maintain access to EU support measures if we are to ask for any flexibility in their use in the coming months.

Thank you, Ms Graham. Mr. Farrell, we are under serious time pressure, so you will have to be brief.

Mr. Eamonn Farrell

There already has been an impact on the calf export market in 2020 due to Covid. We already have seen a 27% drop in live exports of calves to the Continent. Within that, the Dutch market has declined by 47% because of the closure of the food services market where veal was the primary product.

What has helped is the increase in farm-to-farm sales and a decision by the Department to increase the TB testing requirements from 42 days to 120 days. The latter has helped produce a sturdier, healthier calf which has gone into the beef supply chain. If that measure could be continued, as we are still living with the impact of Covid and with Brexit on the horizon, it would be welcome.

The concern is that if there is a blockage on the land bridge side, that would have a knock-on impact on ferry routes to the Continent. That in turn might impact on the live trade. The addition of extra ferry capacity is welcome. The Danish company coming in with a direct route to Dunkirk will help. That is welcome.

In the longer term, options around dairy breeding will have to be looked at seriously. There are measures under way through a calf welfare stakeholder forum which the Department is chairing. There are measures around sexed semen. The dairy beef index will have to be increased in terms of dairy farm usage, as well as improving the overall dairy to beef integration which is vital.

Senator Lombard and Deputy Martin Browne will get written replies sent in from the organisations due to the time constraints.

Senator Tim Lombard

What is the position on the fixed milk price contracts that were issued by co-operative societies in the past four months? We have seen fixed milk prices going from 33 cent per litre in the South to 26 cent per litre in the North. Can the witnesses explain to me the basis on which these were formulated? Was it based on a hard or a soft Brexit? Where is the line that co-operative societies have worked on putting together that fixed milk price contract? Could we have a scenario that, where they were based on a soft Brexit, that the co-ops will be under strain? Was a conservative approach taken and if there was a good Brexit, could the farming community get a windfall?

What is the impact of Bord Bia on both the dairy and beef sector? During the last session of this meeting, we heard about the impact Bord Bia has had over the past four years in trying to secure new markets appropriate to a new regime. Are the witnesses happy with how Bord Bia has engaged and delivered on providing new markets? If there was to be a change, where would they see it needed to ensure Bord Bia was more proactive? The witnesses are the men and women at the coalface. They might have different views as to how things could be done. What changes could Bord Bia engage in with the stakeholders to ensure more productivity regarding markets?

Thank you Senator. If the witnesses do not mind, they could provide written answers to Senator Lombard. Unfortunately with Covid, I have a lady here on my left giving out to me and telling me I am breaching regulations.

I thank our guests for attending. We are at a critical time for our industry. They might let us know if there is anything they want us to raise in the new future. This scenario is changing by the hour. As Mr. Carroll noted, we will not really know until 1 January how our industry will deal with the Brexit scenario that emerges. As it stands, a hard Brexit is probably the best outcome we can hope for at this stage and it is very worrying for the whole sector. As I said to the two other delegations that appeared before the committee earlier, there will be an additional €1.6 billion in tariffs, 90% of which will be suffered by our sector. This is deeply critical for our industry. It has never before been at a crossroads like in this, in my memory at least. I thank our guests for participating. We could have spent much longer talking but, unfortunately, with Covid we have time restrictions.

That concludes our proceedings for today. I propose we hold a meeting in private session on Teams at 10 a.m. on Thursday, 10 December to discuss our draft report on forestry and to deal with correspondence issues. Is that agreed? Agreed.

The joint committee adjourned at 6.12 p.m. until 10 a.m. on Thursday, 10 December 2020.