Milk agency bracing for Brexit ‘worst-case scenario’

The National Milk Agency has issued a fresh warning over Brexit, claiming it was advisable to prepare for “a worst-case scenario”.

In the foreword to the 2017 NMA annual report, chairman, Denis Murphy, said that while the domestic market is the destination for 10% of milk supplies, “the UK was the market for 24% of dairy export sales, amounting to €965m, which increased by 15%”.

“Half of Ireland’s cheese exports and a quarter of Ireland’s butter exports, equivalent to almost one-third of domestic annual milk supplies, were exported to the UK,” he said.

“This is one measure of the potential, disruptive impact of a ‘hard Brexit’ for the Irish dairy sector and for the Irish State.”

Irish dairy exports hit a record high last year, increasing to €4bn, with dairy and ingredients exports representing 32% of all Irish food and drink exports.

According to the report: “There still remains a high, political downside risk that the UK may exit the EU without a trade agreement being put in place and the possibility of Irish food exports to the UK encountering import tariffs, as well as lower market prices, while Irish food imports from the UK will be subject to EU tariffs.

No member state of the EU is as exposed to the adverse consequences of the UK’s Brexit decision as the Irish State and no sector within the State will be as impacted as much as agriculture — Ireland’s largest indigenous sector.

“For Irish processors and producers, the approach must be to hope for the best, but prepare for a worst-case outcome, by diversifying products and markets and focusing on cost-reduction and efficiencies.”

Domestic milk supplies to creameries and pasteurisers increased by 9% last year. National consumption here of fresh liquid milk fell by nine million litres, or 2%, on 2016, but the Irish still have the highest per-capita consumption of fresh drinking milk in the world, with an annual 121 litres per person, per annum.

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