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Monday 20 August 2018

Brexit poses 'a sobering challenge for the dairy industry' - Glanbia chief

Concerns: Glanbia chief executive Jim Bergin
Concerns: Glanbia chief executive Jim Bergin
Louise Hogan

Louise Hogan

The "sobering challenge" posed by Brexit to the Irish economy was highlighted yesterday when the boss of Glanbia Ireland outlined a dramatic fall-off in the incomes of dairy farmers.

Citing its impact on one just one of its eight plants, chief executive Jim Bergin said the Brexit vote and subsequent decline in the value of sterling has wiped €17m from the rural hinterland surrounding the Glanbia's newly revamped Wexford cheese plant.

The investment of €35m in the milk processor's newly unveiled facility, alongside plans to invest €160m at its plant in Belview, Co Kilkenny, are part of a two-pronged approach to hedge against market difficulties.

Mr Bergin warned the effects of Brexit could turn into a "crisis situation", and he urged Agriculture Minister Michael Creed to continue his work on alleviating difficulties for the farming sector.

"The sober element of this is that the €111m that we pay out from here, already in terms of sterling weakness has been reduced by 15pc, that is €17m to the farmers of Wexford before Brexit kicks in.

"Every day we hope for a positive outcome," he said.

Mr Creed said Ireland was now trading in a challenging international environment, with talk of 'trade wars' from the US White House.

"Trade wars are difficult and nobody wins. Certainly it would be a spiral downwards if we got dragged into a situation where food becomes one of these retaliatory products in a global trade war," he said.

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Mr Creed added that the Irish agri-industry was diversifying and looking for new opportunities outside the highly-important UK market.

The Enterprise Ireland-supported expansion just outside of Wexford town has seen the Wexford brand cheddar cheese being sold in Dubai, the US and at home.

Mr Bergin said there were pay cheques going out from the plant to farmer suppliers in the Wexford area that will total €111m in a year.

"It is not going to an urban centre, it is not going to the main street in Wexford. It is going down lanes, it is going down byroads and it is going into farm homesteads. It is feeding and clothing and educating farmers, as it has done for the last 59 years and will do for the next 50 years," he said.

Mr Bergin emphasised that the economic multiplier for agriculture means the €111m becomes €220m of economic activity in the local area. He pointed out Glanbia Ireland has eight plants delivering for rural economies countrywider.

Between now and 2020 Glanbia Ireland expects to invest between €250 and €300m to facilitate a 30pc growth in milk delivered from its 4,800 farmer suppliers.

With the rapid growth post-milk quotas, Mr Bergin said the outstanding challenge was that the processor was "behind the ball" all the time with the high level of expansion in the milk pool, and all new facilities must be delivered on time.

He said that Wexford creamery had to be operating in March of 2017 and process more than 11 million litres of milk at peak week in May.

Mr Bergin also confirmed Enterprise Ireland supported investment of €160m in Belview to move along the chain towards delivering finished high-value infant formula product.

Irish Independent

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