With a new British Prime Minister in charge, the UK government has stepped up planning for a no-deal exit from the EU.

That has filtered down to a local level, with NI farming representatives invited in to meet DAERA officials to discuss what sectors might be most at risk from a no-deal exit, and what support might be necessary to keep farmers in business.

Given the seasonal nature of production, the UK market is in surplus at this time of the year and reliant on trade to the EU, especially France

Fundamentally, a no-deal exit means no free trade. That, of course, assumes the EU protects its single market, and tariffs and non-tariff barriers apply. Those controls effectively stop product moving.

The most obvious sectors to be initially hit are sheep and dairy. The sheep sector in particular, faces two main challenges. Given the seasonal nature of production, the UK market is in surplus at this time of the year and reliant on trade to the EU, especially France.

In NI there is also the movement of live lambs across the Irish border.

For the year to date (to the end of July), a total of 186,730 NI lambs have been sent for direct slaughter in Irish plants – 48% of all NI lambs. A surplus of lamb means a collapse in prices on the UK market.

The short-term issue is that a lot of this NI milk would end up in powder

In dairy, while there is currently a significant cross-border movement in milk, at the same time there is probably just enough capacity in NI to process all NI supplies (assuming no breakdowns) if cross-border trade is stopped.

The short-term issue is that a lot of this NI milk would end up in powder, a commodity in which the UK is already 200% self-sufficient. So there is a potential for lower prices until the sector re-adjusts, and given the importance of the dairy industry to the wider agricultural supply chain, that would have a significant impact.

To alleviate the problems, the UK could decide to take product off the market to put a floor in prices, or even bring in a system of export refunds to encourage sales to non-EU countries. Either way, it will cost money.

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