Brexit uncertainty leaves Irish businessmen, farmers waiting with their fears

CASTLEBLAYNEY — At a recent cattle auction in Castleblayney, an Irish Republic town of 3,600 people near the border of Northern Ireland, Connell Nugent stepped onto the auctioneer’s block as he and his father before him have for decades.
He sat behind a wooden desk worn down by decades of gaveling, welcomed the crowd and launched into the auctioneer’s chant.

Several dozen cattle farmers in flat caps, raincoats and knee-length rubber boots encircled the show area. He rapidly named prices while his eyes scanned the crowd for bids. Hundreds of cattle needed to be sold, and it was Nugent’s job to do it quickly.

Just two miles away lurks an invisible threat to these farmers’ livelihoods: Brexit and a possible hard border with Northern Ireland. On June 23, 2016,  U.K. voters voted 52 percent of favor of Brexit and 48 percent to remain in the European Union.

Connell Nugent, auctioneer and chartered surveyor, conducts a cattle auction at Castleblayney Livestock Sales. The beef sector is the largest part of Ireland’s agri-food industry, with over 100,000 farmers working in beef and livestock production. Photo by Erin Patterson

During his childhood, Nugent lived south of the border in the Irish Republic but went to school in British-ruled Northern Ireland, where his mother was a teacher. He said many people in Castleblayney have family and own farms on both sides of the border.

“I remember when I was a child, there was a hard border,” Nugent recalled as he sat in his office, a small room with shelves full of property sales records in labeled binders, evidence of his other life as a chartered surveyor.

The border was messy, he said, and trucks had to wait 30 minutes per day to get through customs.

The hard border was established in 1922, when the Parliament of Northern Ireland opted out of the Irish Free State. During the Troubles in the 1970s, the border was heavily monitored with military checkpoints on the main border crossings.

“There’s a maze of small border roads here,” Nugent said. “Everybody had to go by the main roads so they could be monitored.”

He said farmers would rebuild bridges across the border and soldiers would destroy them again, reflecting the border tensions during the Troubles.

Military border posts were eliminated with the Good Friday Agreement, a 1998 peace deal between Catholic nationalists generally seeking a united Ireland and Protestant unionists who generally wanted Northern Ireland to remain part of Britain. Customs posts were removed earlier in 1993 with the introduction of the European Union single market.

“I went to school in the north,” Nugent said. “You knew when you came into the south because you just dropped about a foot into rougher roads. The people in my school would say ‘You’re living in Mexico.’” They called the Republic of Ireland “Mexico” because its economy was not as strong as Northern Ireland’s.

A view of the backroads of Castleblayney, an Irish town two miles from the Northern Irish border. A hard border with Northern Ireland could affect the livelihoods of its people. Photo by Erin Patterson

Before joining the E.U. in 1973, Ireland’s economy was extremely dependent on Britain, which limited substantive economic development. When Ireland joined the E.U., trade increased and expanded. Ireland’s involvement in the E.U. alleviated its reliance on the U.K. and accelerated its economic development.

In the mid-1990s, the expansion of foreign direct investment contributed to Ireland becoming known as the “Celtic Tiger,” a term representing the period when Irish competitiveness was extremely high. As a result, Ireland’s economy eventually caught up with more developed European countries.

“Northern Ireland was massively ahead of southern Ireland before we joined the E.U., and now I’d say we’re massively ahead of Northern Ireland,” Nugent said.

His comment reflects the difference in growth rates between the economies of Ireland and the United Kingdom.

Businesses like Nugent’s could also be overrun if Britain makes trade deals with non-E.U. nations after Brexit, for example with the South American trade bloc Mercosur, whose members are Argentina, Brazil, Paraguay and Uruguay.

“I’m not so much afraid of the Brexit,” said Nugent. “I’m afraid of this Mercosur, that if beef’s allowed in, it’ll flood the European market and bring the prices down in Europe, because those countries are massive producers of beef.”

The sheer scale of Mercosur’s industry further fuels Nugent’s concerns. After reading an article about the transformation of the savanna region in Brazil, originally unsuitable for agriculture, he wondered how that area compared to his own country and quickly learned it was many times bigger than the 32 counties in the Irish Republic and Northern Ireland combined.

“I don’t think the ordinary Irish person is aware of the scale that’s out there that could come in here.”

Brazil’s savanna, or Cerrado region, is a 180 million-hectare area of Brazil that experienced a similar transformation through the no-tillage system and soil liming, when calcium and magnesium-rich materials are applied to soil to neutralize acidity. The Cerrado now accounts for 70 percent of Brazil’s total agricultural production. By contrast, Ireland is 6.9 million hectares and has 139,600 farms of an average size of 32.5 hectares. One hectare is the size of most sports fields.

“And it’s like, Jesus, the scale is massive. So you just think like, if they were producing beef only on that one section, they could just flood us out,” Nugent said. “I don’t think the ordinary Irish person is aware of the scale that’s out there that could come in here.”

Nugent’s cattle-auctioning business is not the only one that could be affected by the repercussions of Brexit. Other businesses in Ireland’s agri-food industry are at risk because the United Kingdom is Ireland’s main market for agri-food.

“We are fighting for minimal destruction and for the maintenance of the status quo,” Liam MacHale, Director of European Affairs for the Irish Farmers’ Association, said in a telephone interview from his Brussels office.

Most Irish farmers expected the maintenance of the status quo before the Brexit referendum. They were shocked when the vote passed.

John McGuinness is a beef cattle farmer a few minutes’ drive outside Castleblayney. He was in his home watching TV when he heard about the Brexit vote.

“I was very surprised,” he said, leaning against the kitchen counter in his home. “Because to be honest with you… I’m still convinced that most people within the United Kingdom would prefer to stay part of the EU.”

Brexit has not had any immediate effect on McGuinness’ cattle farming business because it is not in place yet. He echoed the view of other cattle farmers.

“We don’t know what’s taking place,” he said.

Many have to wait to hear the outcomes of the negotiations before making plans to deal with potential consequences. The Irish border remains an unsolved challenge in Brexit negotiations.

Cattle wait to be sold at an auction in Castleblayney, Ireland. Ireland is a main source of beef for the UK market. Photo by Erin Patterson 

“I suppose you get used to it,” McGuinness said of the uncertainty. “You listen to the pros and the cons, you do, and I personally think it’s a game that they’re playing with each other. It’s whoever plays the best cards with the best deal.”

Britain has been criticized for lacking a policy during negotiations. Prime Minister Theresa May’s government is divided on Brexit. She has attempted to unite her administration without alienating the Brexiteers in her government, but the United Kingdom is still unable to adopt a common stance for Brexit. The lack of clarity has increased uncertainty in the EU, which has already affected parts of Ireland’s economy.

Although McGuinness’ cattle farming business has not yet seen any challenges from Brexit, other sectors of Ireland’s agri-food industry have been hit. Brexit has already affected the mushroom industry, which exports 90 percent of its crop to the United Kingdom.

Dr. Etain Tannam, Associate Professor of International Peace Studies at Trinity College Dublin whose research interests include the Northern Ireland/British-Irish relationship and the impact of Brexit, expressed concern for Ireland’s mushroom industry.

“The uncertainty caused by Brexit so far has contributed to inflation and economic problems in the U.K., and the fall of sterling, and that has led to price inflation in the euro for goods exported to the U.K.,” she said, “so the mushroom industry is really suffering.”

“You just keep your head down and you just try and hold on to what you have.”

Gerry Reilly, a mushroom farmer in County Westmeath, was directly affected by a fall in sterling after Brexit. He sells his mushrooms in advance to British supermarkets, with some supply contracts lasting an entire year. After sterling fell, Reilly was no longer making as much money in euros.

Due to the length of the contracts, he had no choice but to continue producing mushrooms at a loss for many months until he convinced the markets to give him a new price to match the lower exchange rate.

“But the fact that there was a yes vote, straightaway the exchange rate lost 20 percent,” Reilly said. “I was exporting maybe 100,000 euros’ worth per week to the U.K., and suddenly I was losing 20 percent of that. I was losing 20,000 per week.”

Forced to minimize costs after sterling’s decline, he is not investing in the growth of his business and is keeping a close eye on expenditures to mitigate any further consequences of Brexit, as negotiations remain conflicting and unclear.

“Uncertainty makes you feel that you don’t spend any money on your business development or growing your business,” Reilly said. “You just keep your head down and you just try and hold on to what you have.”

Gerry Reilly, owner of Reilly Mushrooms, gazes at a map of his mushroom farm. His business could be hit again by a hard border with the United Kingdom. Photo by Audrey Deiser.

Brexit also affected Reilly’s son Joe, who moved to the United Kingdom for career opportunities, change, challenge and a higher salary. Just over a year later, he returned to his father’s mushroom farm after Brexit hit sterling and his salary slumped 20 percent in euros.

“I moved back from the U.K. to Ireland because there was no extra gain,” Joe Reilly said. “I was getting more money from going to the U.K. at the time, but then that was wiped out with the exchange, so that was one thing that happened to me.”

Had he anticipated the Brexit vote, he said, he would not have moved to the United Kingdom.

Joe Reilly now works as project manager at Reilly Mushrooms.

Reilly’s story is one of many examples of Irish immigration to Britain for seasonal employment, higher incomes and Ireland’s longstanding cultural, economic, political and social links with Britain. The two countries’ cultural and historical ties run deep.

Brexit seems to have offered the farmers of the Irish border an opportunity to demonstrate their longstanding resilience in the face of change, characterized by a certain stoicism in the words of McGuinness.

“We’ll wait and see what takes place,” he said.