Ireland's dairy farmers fear EU-China trade war escalation

With the ongoing tariff war between China and the European Commission, Ireland's dairy farmers are among those fearful of the knock-on effects.

China imposed temporary anti-dumping measures on imports of brandy from the EU on Tuesday, hitting French brands including Hennessy and Remy Martin, days after the 27-state bloc voted for tariffs on Chinese-made electric vehicles (EVs).

The EU's initial decision was made in response to alleged Chinese government subsidies to its car industry. 

China's Ministry of Commerce has also opened an anti-subsidy investigation into dairy products from the European Union. Ireland is a major dairy exporter to China and concern is growing there among farmers.

Bill O'Keefe's family have farmed the same land in Kilkenny County in southern Ireland for almost 400 years. 

With its lush, rain-soaked fields, the Republic is famous for its grass fed cows, helping the dairy sector become a multi-billion dollar export industry. O'Keefe has around 400 cows, making this one of the larger family farms in Ireland, producing about 6,000 liters of milk a year.

China is an important market for Irish dairy but O'Keefe fears his business could suffer and become an innocent victim of the trade dispute.

"We are caught in the cross-hairs of something that is not our making and we don't have much ability to influence that," O'Keefe told CGTN. "We don't have much influence on price, so anything that impacts on our price is beyond our control and is obviously worrying for farmers over here."

Last year Ireland exported around $470 million of dairy products to China, according to the Irish Food Board, Bord Bia. 

The Chinese subsidy investigation is currently looking at cheese, milk and cream products, which make up about a third of total sales.

So far it doesn't include infant formula, which at $300 million a year is by far Ireland's largest dairy export to China.

As well as running the farm, O'Keefe is also chair of the Irish Farmers' Association Business Committee.

He said: "If infant formula, or the high value powders were to be pulled into this investigation it would be very worrying from Irish dairy farmers who have made huge investments in that space over the past few years to meet that market."

Aidan Brennan, dairy editor for the Irish Farmers Journal, has been writing about the dispute.  

He told CGTN: "China is a large importer of dairy and beef, Ireland is a large exporter of dairy and beef and we want to be part of the opportunities which exist in China. The products the trade dispute affects are quite small, albeit any dispute is going to be damaging to farmers. We don't want to see an escalation but if it does happen and infant formula is included it would be more damaging."

Brennan is not sure how much influence Ireland can have on the issue. "The dispute is at EU and China level rather than Ireland and China level and Ireland has little influence at that European trade level," he explained.

In Ireland's case, China is looking into its dairy equipment subsidy scheme, where the government gives grants to farmers to modernize their equipment. The authorities say these grants were approved by the World Trade Organization.

It isn't just farmers who could be impacted by the dispute. O'Keeffe sells all of his milk to the nearby Tirlan integrated dairy processing plant, which claims to be the largest in Europe, handling a billion liters of milk a year. It also runs a separate plant for infant formula milk powder. 

There are similar facilities throughout Ireland. A recent study by Ernst and Young estimated that the industry supports more than 50,000 jobs.

The Chinese subsidies investigation is likely to take a year and Irish dairy farmers and the broader dairy industry are praying that by then the whole dispute could be resolved.