Dairygold is ready to fight its corner in relation to cheddar exports ahead of upcoming Brexit negotiations, according to Dairygold CEO Jim Woulfe.
Brexit is the single biggest challenge facing Dairygold at the moment; a dedicated team within the organisation is working on Brexit issues, Woulfe said.
“Some 38% of our milk is going into cheese, of which roughly 30% is going into cheddar. This cheddar is destined for the British market.
We have been doing risk analysis, we have been doing various scenario planning and we have been looking in the context of ‘what is the worst case scenario here’.
“The worst case scenario at this point in time is the whole issue of WTO (World Trade Organisation) tariffs.
“WTO tariffs are €1,671/t; that equates to 16c/L on the milk that would be going into cheddar. But that is the worst case scenario,” he said.
There is no set suite of solutions available for issues arising as a result of Brexit, Woulfe added.
But the one thing that is clear is the need to work together with industry colleagues – the Department of Agriculture, Food and the Marine, Bord Bia and Enterprise Ireland – in trying to ensure that the importance of the cheddar sector is understood, he said.
The industry, as a whole, is working through Brexit and trying to find solutions to problems that have never been encountered before, according to Woulfe.
“I don’t think anyone has the solutions yet; the trigger was set off on March 29, which is a little over two weeks ago. What we are doing at the moment is ensuring that we are undertaking all of the scenario planning, as well as communicating with the people who need to be communicated with.
“What is clear is that this is going to take quite a long time. This is not going to be a short process or a quick fix.
This is not something you can open up a box of tricks or a toolkit and say we have the solution here. So, there is an awful lot of work in this. This is going to occupy an awful lot of our time.
“But on a confidence basis, let’s be clear; we have dealt with adversity in the past. We have come through three decades of quotas and we have come through the Y2Ks. But some of those issues were inside our control; this is not really inside our control,” he said.
Fighting for the current market position in Britain is a more realistic option than focusing on locating alternative markets for cheddar products if the ‘worst case Brexit scenario’ were to come to pass, he added.
“It isn’t as easy as saying where do we move into, as if you can close one door and open another. I think what behoves us is to fight our corner in relation to getting cheese to the British market.
“We would be working with the Department of Agriculture, Food and the Marine, Enterprise Ireland, Bord Bia and our other industry partners.
“We can put between 13.5m and 15m litres of milk a week into cheddar; that’s gigantic. We can’t just simply say door shut, lets move on,” Woulfe said.
A premium product
Cheddar is a premium product that is a necessity in the UK, according to Dairygold Chairman James Lynch.
The one thing we know is that we have a premium product that is required in the UK. The population of the UK requires it; we have it.
“It’s how we can get everyone to sit down and acknowledge what’s there. You have the tariffs, which is the major concern and how that’s going to be dealt with.
“You have the cross border issues that are going to be involved and the extra costs that are going to be associated with getting our product over there.
“That’s where the big challenge is; we have to prepare for the worst case scenario in our business.
“It’s not a matter of deciding you’re going to switch from cheddar cheese to mozzarella in the morning. It can’t be done. It’s not as simple as that; you have to develop markets to go there,” Lynch said.