John Simpson: No gain in farmers crying after milk has been spilt
Farmers are now realising that Brexit will mean the Irish border will become an important new awkward dimension in planning farming businesses. Farmers and their business markets already know how to cope with currency differences which were part of the EU market arrangements.
Sterling and euro conversions are part of the daily adjustments as produce crosses the Irish border.
What has been inadequately recognised in the debate about Brexit is the inevitability of some form of new discipline because the EU marketplace, comprising 27 countries, will not be 'open' for trade in agricultural products from the UK.
This means that produce from farms in Northern Ireland if sold to buyers south of the border may face regulatory tests (including animal health) and import tariffs in the Republic.
The pending post-Brexit legal position is forbidding. It will be time-consuming and tend to disrupt existing commercial practice.
Also, without encouraging unapproved behaviour, traders will quickly become well aware of unofficial trade routes.
That is, in explicit terms, the incentive to smuggle if there is no enforced statutory discipline (in other words, border policing either on the border or at a physical distance).
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The current debate about the impact of Brexit for farming is still confused. The headlines refer to the possible consequences if there is no deal and the UK adjusts to a complex new set of trading arrangements, often referred to as WTO (World Trade Organization) terms.
Farming poses serious questions for a no-deal outcome. A no-deal outcome is the most serious possible outcome.
The other possible outcomes are:
- The UK and EU reach an agreed deal.
- An agreed deal leads into an agreed transition period where present practices continue for a couple of years.
- The agreed deal allows the long-awaited discussion between the UK and the EU on the continuing trading and commercial relationships between the EU and UK to be formalised, with an expectation of efforts to minimise trading disruption.
- Alternatively, going in the opposite direction, the UK might unilaterally invoke the withdrawal of Article 50, which is the technical step which allows the UK to cancel the decision to leave the European Union.
The current fearful reactions to possible cross-border restrictions on farm produce are based on a no-deal assumption.
The implications are wide-ranging and serious. This possible disruption of the farming industry should not be a surprise.
Leaving the CAP was always likely to be hazardous and the concerns for milk, beef and sheep trades were predictable.
However, the best hope is that it may not happen in the extreme form that some voices in the farming sector contemplate.
An agreement to a transitional system is still possible.
Northern Ireland farmers and food processing businesses are being warned that, in part, they may find EU markets less open because of charges and regulations on the export of beef, lamb, milk and cheese.
In reverse, there is some expectation that cheaper imported supplies from non-EU sources, particularly of beef and chickens, could undercut prices in the local market if the UK follows a policy giving some preference to cheaper food.
Cross-border smuggling of cattle, milk and sheep is not a new feature on this island.
Many older farmers lived with well-established but technically illegal commercial deals in the 1950s and earlier when cross-border prices and differences in guaranteed payments created a big incentive to illicit trade.
Incentives to engage in unofficial trading patterns seem inevitable unless there are special 'backstop' provisions in the new EU-UK trading arrangements.
If the Irish border is so porous that unofficial trading becomes the norm, there may be an official temptation to turn a blind eye, although that would not be likely to be approved in Brussels.
Official rules on certification of the source of produce and distortions in registration of the origin of animals - and produce - will become a legalistic concern, to put it mildly.