‘Soft’ Brexit will save Irish dairy processors over €160m
THE proposed Brexit deal may save Irish dairy processors over €160m.
That’s the tariff that could have been levied on Irish Cheddar cheese exports to Britain under WTO rules.
The seriousness of the threat to the dairy sector was confirmed by Dairygold CEO Jim Woulfe at a regional meeting in Cork last week.
He told suppliers that the imposition of WTO tariffs on the co-op’s Cheddar sales in Britain would cost farmers 4c/l across the total milk pool.
The Irish Dairy Industries Association (IDIA) puts total Cheddar production at 185,000 tonnes, 172,000 tonnes of which is exported. Around 56pc of Cheddar exports, or 97,000 tonnes, are sold on the British market.
Total Cheddar exports are worth €465m, with sales to Britain valued at €260m. Growing food nationalisation has pushed the vast bulk of the Irish Cheddar sales in Britain on to the service sector.
Despite this trend, the British market remains a critical one for Cheddar sales and an IDIA analysis put the cost of “punitive WTO tariffs” at €400/tonne.
If Ireland was to maintain its market share in Britain, this tariff would have to be carried by suppliers and would result in a cost €400/tonne on the 97,000 tonnes shipped to Britain, or over €160m.
Although the IDIA accepts that events over the last week make the prospect of the UK remaining in the EU customs union more likely, it is still planning for the possibility of a hard Brexit.
The industry is therefore working with State agencies to reduce its dependence on Cheddar.
A strategic plan for the expansion of overseas markets is understood to be in the pipeline.
Milk processors are also assessing the potential to diversify infrastructure and adapt facilities for new cheese products.
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