Brexit not the only trade headache for Irish agri-food sector

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Government compensation for the increased costs of importing animal feeds such as beet pulp and cane molasses from the USA has been refused.

There has been a 25% EU import duty increase on beet pulp and molasses since November 10, 2020.

“There are no plans at this point to put measures in place to support the industry as a result of the imposition of these tariffs”, said Agriculture Minister Charlie McConalogue.

He said he appreciated the impact that of the tariffs on the grain and feed sector.

They are part of the long-running Airbus and Boeing trade war between the EU and the US.

In the latest retaliation measure, last November, the EU imposed tariffs on a range of US exports to the EU.

Minister McConalogue said, “It should be noted that one of the European Commission’s criteria for product selection in this instance is that the EU is not reliant on the US for the supply of these particular products, and that there are alternative sources of supply.”

However, the Irish Grain & Feed Association has said that there was no consultation with their members on the potential impact of the tariffs, and they were given no notice of the tariffs, to allow them act to limit damage to businesses and customers.

Representing the compound feed manufacturers, feed material importers, grain intake and premix companies in Ireland, the IGFA said the EU provided member states ample opportunity to discuss and review the proposed list of US products for tariffs, and to consult with industry.

But Irish government officials didn’t consult with the industry or forewarn it, according to an IGFA statement.

IGFA Director Deidre Webb said the 25% tariffs add over €2 million per month to the import costs for US beet pulp and molasses.

She said the damage to Irish farmers and traders could have been minimised if officials had requested a workable 30 or 60 day notice period at the very minimum.

Or they could have notified the industry early enough for it to prepare and protect itself.

Yet again, Irish livestock farmers are victims in the 16-year-old row over government aid to the US and EU aircraft industries, in what is estimated to be the world’s largest-ever corporate trade dispute.

The World Trade Organisation ruled that each side could impose tariffs on imports of the others’ goods.

The latest retaliation was the EU putting tariffs of up to $4 billion (€3.369bn) on US imports, in an effort to bring the US to the negotiating table.

But nobody told the Irish animal feed industry, caught unawares by the 25% tariff on two important feed ingredients.

“Surely the objective is to retaliate against the US, and not to add more pain to the EU internal market?” said the IGFA spokesperson.

She said the extra pressure came at a difficult time for the feed industry, entering the peak feeding period while preparing for Brexit.

The industry had ‘front loaded’ deliveries ahead of the January 1 Brexit date.

Defensive reactions, such as switching destinations and cancelling shipping contracts were simply not possible at short notice, without serious financial penalties.

“These unexpected additional costs will be picked up by the internal market and not fall on the US suppliers”.

“The costs of this additional tariff will be passed down the chain to Irish farmers and Irish agricultural businesses.”

The IGFA said beet pulp pellets play an important role in ruminant diets, especially now, when the EU market place is experiencing significant tightening of digestible sources of feed materials, and the EU sugar beet crop is impacted by the effects of drought and diseases (yellow virus).

“Overall, the supply of beet pulp is reduced by 6% in the EU and 14% in the rest of the world,” said the IGFA spokesperson.

“It follows therefore, that the loss of US supplies from our feed balance sheet will be very challenging.

Molasses is used as a nutritional energy source, palatability enhancer, and feed formulation binding ingredient.

Over 100,000 tons comes into the EU each year from Florida.

In Ireland, this is destined for the mineral feed supplement market (licks/blocks).

Other origins of molasses can give rise to adverse chemical reactions in the mineral feed supplement manufacturing process, resulting in problems such as soft product, shrinkage, or expansion.

Therefore, it is not possible to change molasses origin without research/investment in the production process.

Sugar cane is not grown in Europe, and beet molasses is not generally used for making mineral licks/blocks, which are a product particular to the maritime grass growing regions of the EU, and Ireland in particular.

The IGFA requested government Ministers Charlie McConalogue and Leo Varadkar to consider what flexibility they can apply to the interpretation of the new tariffs regulation.

Meanwhile, 72 US and European associations representing a wide range of industries have asked President Joseph Biden and EU Commission President Ursula von der Leyen to immediately suspend tariffs on sectors unrelated to the ongoing trans-Atlantic aviation trade dispute, which has been ongoing for 16 years.

It’s the second time in 12 months that the Irish agri-food industry was caught up in the Airbus-Boeing trade war crossfire.

Eucolait, the European dairy traders body, has estimated that the annual dairy trade between the EU and US is worth €1bn, so the hit to the EU dairy industry is €250 million.

Year to date trade figures between the EU and the US indicate that the tariffs are impacting cheese sales, with EU products entering the US down 16%.

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