The mood in Dublin Castle is sombre as 300 food businesses gather at a “getting Ireland Brexit-ready” government workshop before a crucial cabinet meeting on a €5bn no-deal budget.

In a show of hands, 80% of delegates confirm they have started preparations for a no-deal Brexit but just one man raises his hand when asked: who feels they are prepared?

While the mood music over a possible Brexit deal appears to have shifted following the meeting between Boris Johnson and Leo Varadkar in Dublin on Monday, the outlook in Ireland remains bleak.

In July the Irish government outlined two Brexit budgets for 8 October with the cabinet opting to go ahead with the no-deal proposal on Wednesday, which they hope will mitigate against a predicted recession in rural Ireland, job losses and lower tax takes in the event of an expected slowdown in GDP growth.

The Irish Fiscal Advisory Council said a large budget deficit could emerge with the tax take down and spending increased to cushion the blow to agriculture, tourism and other industries.

“The international economic outlook has deteriorated in recent months. While the situation is volatile and evolving, the risks of a hard Brexit are high,” it said in its pre-budget submission on Wednesday.

At Dublin Castle, the agriculture minister, Michael Creed, conceded that the all-island agri-food sector could be in serious trouble if the UK crashes out.

“I do accept that that’s in some jeopardy now and obviously we are in negotiations with the [European] commission on what alternative arrangements can be put in place should the withdrawal agreement fall,” he said.

He declined to give any detail on what these arrangements would be, an omission that is causing increasing anxiety among farmers and food producers in the border regions.

With 30% of all Northern Irish milk taken across the border for cheese and butter production and 400,000 sheep a year going south to abattoirs in the republic, farmers are deeply concerned.

“All in all, no deal will be a total disaster and a percentage of farmers would be out of business,” said Ivor Ferguson, president of the Ulster Farmers Union, who was also in Dublin Castle to try and buttonhole officials and ministers.

There was a palpable sense of frustration about being kept in the dark about border checks as delegates mingled over a coffee break.

“They just wouldn’t answer the questions. The department officials on stage said that’s a political question when asked about border checks, so it needs a political answer,” said Eamonn Wall, plants manager at the Arboretum horticulture centre in Leighlinbridge in County Carlow.

“How can you plan around that? It’s like trying to organise a wedding without knowing who the bride and groom are,” he said.

Last week Varadkar confirmed for the first time that there would be checks on goods coming across the Northern Ireland border. “Some may need to take place near the border” rather than on the border but most would be in ports, airports and at businesses.

That is of little comfort to agri-food businesses facing mandatory sanitary and phytosanitary (SPS) checks.

One poultry business told the Guardian they have been told that “near the border” is actually 100 miles away at Dublin Port, the only place with a Brexit-ready border inspection post.

Manor Farm in County Cavan, which slaughters 1m chickens a week, employs more than 800 people and relies on 160 farmers, faces major disruption and additional costs if this is the case, one of its executives revealed as they took stock of what little information they garnered at the Department of Agriculture seminar.

They import day-old chicks from across the border in Dungannon and six weeks out they still don’t know if they will have to make the 200-mile trip to Dublin just to keep their business running.

“Brexit is taking up a lot of our time – 70% to 80% of my job in March was preparing for Brexit and we’re back here again and you can’t fathom what is going to happen. It changes by the hour,” said Frances O’Reilly who works in finance.

Trade to and from the UK is a vital part of Ireland’s economy with €16bn (£14.3bn) worth of exports to the UK in 2018 including around 50% of its beef and almost half its cheddar cheese.

The EU has already given Ireland permission to open the coffers to help businesses cushion themselves – and Irish businesses are demanding £1bn to mitigate the Brexit shock.

Representatives of the French government were also at Dublin Castle to explain the special corridor they have set up for Irish freight using the UK as a landbridge to the continent.

They have built a new smart-border customs system in Calais which will allow officials to distinguish between trucks carrying Irish and British cargo. Scans of documents will be taken while the truck is passing through the Eurotunnel or on the ferry allowing them to be waved through in Calais as an “EU member state” truck not requiring SPS checks.

But Padraic O’Leary, the managing director of Walsh Mushrooms which exports 200 tonnes of mushrooms a week to UK supermarkets and the food industry, says Brexit has already been “a disaster for the mushroom industry”.

Will the plastic punnets the mushrooms are placed in by the pickers incur tariffs? And what about the wooden pallets they are delivered on?

Under EU law the pallets returning from the EU and entering Ireland will have to be heat-treated or fumigated for bugs and disease. But there is a shortage in the UK and the government has not been stockpiling them, Michael Gove revealed last week.

“It doesn’t matter what comes down the track in terms of paperwork, what we can’t deal with is the collapse in sterling,” says O’Leary. “Nobody is making money selling to the UK. We are just surviving.”