DII: Tariffs expose Ireland to pressure from dairy giants

Tariff levels proposed by the UK government would put Irish butter and cheddar under severe pressure in British markets at current consumer price rates and would necessitate increases at consumer level, according to Dairy Industry Ireland (DII).

Increased consumer prices are something the UK government desperately wishes to avoid, the representative group adds.

Reacting to the “deeply unwelcome” tariff levels, DII outlined that the measures would also expose Irish dairy to full international competition in our key market.

This would see pressure from other dairy giants such as New Zealand and the US as, under World Trade Organisation (WTO) rules, they would also benefit from this new tariff schedule, the Ibec specialist sector body highlighted.

The proposed tariff of €221/t on cheddar will result in possibly over €20 million per year in a tariff cost for Irish cheddar.

But related factors such as customs costs, currency issues and an increase of international competition mean that the final bill for industry and farmers will be a multiple of this, DII warns.

The roughly €22 million proposed tariff on Irish butter would be similarly multiplied with a €605/t tariff slapped on initially – but with a range of other costs inflating that figure.

This compares with reductions of a current tariff of €2,313/t for New Zealand butter now down to €605/t – the same as Ireland.

Overall, EU dairies sold €406 million of butter into the UK in 2018, according to the representative group.

26% of Irish butter goes to the UK, with 2018 Irish cheddar exports to the UK worth “well north of a quarter of a billion euro in value”.

The UK will always prioritise a cheap food policy strategy, according to DII; if the country implements this schedule and there are price rises at consumer level, it will adjust it rapidly.

DII has ruled out suggestions of exporting through Northern Ireland, believing that this ‘island of Ireland’ theory is not an option.

“Our reputation as an industry has been long built on the principles of the highest standard of grass-based product – adhering to above and beyond the most rigorous EU food standards,” a DII spokesperson said.

“Worryingly, the British proposals again offer no solution for the island of Ireland milk origin issue or the regulatory divergence threat.

In 2018, 804 million litres of northern milk flowed south for use in a vast range of products in our integrated island of Ireland supply chain.

“DII continues to work to ensure these proposals do not come into effect, and that MPs in London can take a step forward on that immediately by voting to take ‘no deal’ off the table tonight.

“The events of the past 24 hours show clearly the absolute necessity of the backstop,” the spokesperson concluded.