Dairy industry successfully navigates Brexit and tariffs

Sales of Kerrygold products grew 13%.

Clarity around Brexit and the removal of US trade tariffs have delivered a significant boost for Ireland's dairy industry which had already seen a surge in revenues due to the Covid pandemic.

Profits at dairy giant Ornua soared by 69.2% last year on the back of strong sales for its iconic Kerrygold brand and its ingredients business.

For the 12 months to the end of December, group turnover reached €2.3bn with earnings before interest and tax growing 49.6% to €107.4m and operating profit increasing to €83.1m.

Ornua said the performance was achieved against the backdrop of a complex trading environment dominated by Covid-19, market volatility, and the challenges of Brexit and punitive US tariffs.

Last year, Kerrygold sales volume was up 13%, with 10m packets of butter and cheese sold each week. Ornua exports to more than 110 countries.

Increase in profits

The increase in profits means the co-operative will pay €68.7m to its member co-ops and the 14,000 farmers who supply them.

John Jordan, CEO, Ornua, said its portfolio benefitted from the change in consumer behaviour which saw Kerrygold volumes grow by 13%.

"Looking ahead, we are cautiously optimistic about the gradual reopening of economies as the global vaccine rollout gathers pace," said Mr Jordan.

"We have clarity on Brexit, and we welcome strong signals from the US on improved US-EU trade relations."

Also today, Carbery CEO Jason Hawkins told the Cork Chamber Business Breakfast that the movement of goods to and from the UK has gone smoothly since January 1.

"From a Brexit perspective, we haven’t seen many challenges," said Mr Hawkins. 

"A significant part of our business revolves around cheese going into the UK. We did build stocks and were covered in the short term. What we have seen subsequently is that there are some things that need to be ironed out in terms of imports and exports to the UK.

"From Ireland to the UK, things have been fairly smooth. We also have a flavour business in the UK and, actually, they saw more disruption in terms of getting products out of the UK because a lot of the UK trade borders were not prepared. We probably saw more disruption bringing flavours from the UK into Europe or bringing raw material into the UK."

Removal of trade tariffs

Mr Hawkins also welcomed the removal of trade tariffs that had been in place under the Trump administration due to an ongoing trade dispute between the US and EU.

"Protectionism for us is obviously very negative. We rely on an open, global market so we would be concerned about any tariffs but there seems to be a shift in tone in terms of the new US administration."