Irish dairy ‘likely to face post-Brexit trade penalties’

It would be naive to believe that Irish dairy firms will not face some form of trade barrier, fine or penalty, once Brexit takes effect, according to Ornua CEO Kevin Lane.

Highlighting how currency fluctuations have already had an impact, Lane said plenty of challenges lay ahead of the Irish dairy industry including one of the biggest issues – Brexit.

“That’s probably the one that’s keeping us all very focused on the day job,” he told members of the press on Wednesday, May 10.

“We can see no possible scenario where the dairy side of Ireland Inc, or the dairy side of Irish agriculture, will be a winner,” he said.

Ornua has five manufacturing sites across the UK, which accounts for approximately €600 million of all of its sales.

Lane also commented on Ireland’s over-dependence on the UK cheddar market – the biggest cheddar market in the world – which has come under threat since the UK electorate voted to leave the EU last June.

We are going to look at what other cheese types that Ireland Inc could produce and Ornua could market.

“So, while we’ll stay focused on being a cheddar player, there are new opportunities,” he said.

The Ornua CEO added: “Brexit will make product crossing borders more bureaucratic, more timely and more costly, which will also definitely impact on our profitability.

“We will have less volume and we will have less profit in the UK.”

However, Lane maintained that Ornua was working to mitigate some of the risks.

We know Brexit is a negative to our business but we can, through market and product diversification, continue that journey.

Growth plans

Despite volatility and political uncertainty in the UK and US, he said Ornua’s management team was still maintaining a very ambitious growth outlook.

That includes increasing group revenue from the current level of €1.8 billion to €3 billion by 2021. An industry-leading margin target of 3% has also been set.