My Lords, I thank the noble Baroness, Lady Doocey, for her amendment because it goes to the heart of the protocol and the protocol Bill issues in relation to the need for an SPS veterinary agreement. The dairy and farming industries on the island of Ireland require an SPS agreement. I have written to the noble Lord, Lord Caine, today, following last week’s debate on this issue following further discussions with elements of the dairy industry. The bottom line is that unless there is an SPS agreement, that could very much interfere with our dairy industry and totally undermine it.
I shall give a short explanation from the letter. Those in the dairy industry acknowledge the issues that the Northern Ireland retail sector is dealing with regarding the protocol and support for a dual regulatory regime, but such a regime would not work for the dairy industry because we are looking at the very survival of Northern Ireland dairy farmers. Approximately 30% of all Northern Ireland milk is processed in the Republic of Ireland because there is not the capacity to do so in Northern Ireland. It may be worth visiting some of the processing factories in Northern Ireland that are part of a greater co-operative group to see what they do and what they are trying to tell us.
If you create a hard border for milk, which the dual regulatory scheme outlined in the Bill will, there will be enormous environmental issues. Northern Ireland does not have the capacity to dump 30% of its milk, and milk has special regulations for its disposal. You could then move to the culling of perfectly healthy animals which, in a cost of living crisis, is inconceivable. Finally, this would lead to devastating consequences for the economy of Northern Ireland, as the agri-food industry is its bedrock.
So I say to the Minister that those in the dairy industry have looked at the impact of a 30% reduction in sales to an average Northern Ireland farmer. When you consider their average interest on loans and their loan repayments, this would result in an annual negative cash flow. In other words, their costs would be greater than their income.
In summation, it is vitally important that the negotiations achieve an SPS veterinary agreement. From what I have read in the non-papers from the EU of October last year, it is very prepared to enter into such an agreement as part of the negotiations. However, the dual regulatory regime will not work for the agri-food sector. Maybe a bespoke arrangement is required for the retail sector where some of the problems lie.