In the starkest warning to date on the outcome of the UK crashing out of the EU without a deal, Northern Ireland’s dairy processors said the sector is “seriously exposed”.
In the event of No-Deal Brexit, they said Northern Ireland’s (NI) dairy industry is facing a major crisis in terms of the ability service profitable markets, to process all milk and support the jobs and livelihoods of more than 3,000 farm families across Northern Ireland.
Dr Mike Johnston CEO of Dairy Council NI (DCNI) said that current trade tariffs for exporting both raw milk and finished product would be in excess of £300m which would directly result in an impact on the price paid to farmers for their milk.
“Based on Dairy Council NI calculations in a no-deal Brexit, trade tariffs on both raw milk and finished products moved from NI to the EU would total £320m, before you calculate the cost of the administrative burden customs will place on dairy processors.
“This tariff represents 25% of the value of our entire industry. In a sector where the margin is, at best, 3% or 4%, trade tariffs of that magnitude would wipe out the industry.
“The reality is stark for farmers. Our analysis suggests that the milk price paid to farmers would fall by over 10p/L from its current base should such tariffs be imposed,” Dr Johnston said.
DCNI represents milk processors in NI including Dale Farm, Glanbia Cheese, Glanbia Ireland and Lakeland Dairies. These four companies account for over 90pc of the 2.4bn litres of milk collected from NI farms each year.
Dr Johnston sounded a word of caution around the milk processing capacity availability in Northern Ireland. At present 35pc of the entire NI milk pool is processed at facilities in the Republic of Ireland.
“The dairy industry in Northern Ireland simply does not have the capacity to process all the milk produced on farms at present and we are seriously exposed,” Dr Johnston said.
“After maximizing NI milk processing capacity, there is a processing shortfall of some 600 million litres that will not have a viable home if politicians cannot find a solution to the current Brexit impasse.
“That would be a devastating situation for the Northern Ireland dairy industry, farming families, rural communities and the Northern Ireland economy,” he added.
“If we don’t get a Brexit deal and cannot transport raw milk south, without significant delays and/or certification requirements, then our industry is facing a crisis of epic proportions. All processing sites in Northern Ireland will be full while there is no spare capacity to process that volume of milk in Great Britain.
“We have communicated these significant risks in the event of a no-deal to authorities in NI, the Republic and London but have not got any satisfactory outcome so far.”
Dr Johnston said “farmers and processors are extremely worried about the outcome of a No-Deal Brexit.
“We are now less than 25 days away from Brexit and we are still faced with more questions than answers and more uncertainty than certainty. Our farmers, their families, our customers and the entire rural economy of Northern Ireland need greater security and clarity.
“If we crash out on 31st October, we do not have the capacity to process all the milk that will be produced, and we will not be able to afford to pay EU tariffs nor navigate the EU certification requirements such that we can process that milk in the Republic of Ireland.
“Put simply, dairy processors and their farmers will not survive unless there is a deal. NI farmers, processors and customers need a deal to mitigate trade tariffs and enable the continued movement and trade in raw milk and finished products,” he said.