Ornua is moving additional dairy products into the US market ahead of any possible increase in import tariffs by US president-elect Donald Trump.

Conor Galvin, chief executive of Ornua, confirmed the move at the Irish Creamery Milk Suppliers’ Association (ICMSA) Annual General Meeting (AGM) in Limerick today (Monday, December 2).

“President Trump has said he is going to make it more difficult for certain products to be imported into the US. I think how he goes about doing that is a little bit up in the air,” he said.

Galvin said that there is the potential for a “blanket tariff” on all imported goods into the US, that could lead to “conflict” with other trading blocs, “which is nobody’s interest”.

He noted that Ireland and the wider European Union are not currently named as potential locations where an increased tariff could be applied.

Tariffs

“It’s not ideal because clearly it would increase the cost of the product that lands in the US and that’s the whole point of doing it.

“I think we would have to assess the position that leaves us in. The ideal situation here is that you have the free movement of goods,” Galvin said.

The Ornua chief executive noted that a certain level of tariffs already apply to goods imported into the US.

Galvin said that Kerrygold is a premium product which is currently the number two butter brand in the US.

“I believe strongly in the value of our brand, but I also believe in our need to deliver value to consumers.

“Our consumers are very loyal in the US, they like our product but the reality is that if some point if it gets too expensive they may think twice about how much they buy or how often they buy it,” he said.

Conor Galvin, chief executive Ornua addressing the ICMSA AGM

“We have a very strong brand in the US that consumers will purchase even if price is high, but clearly we’ve also moved product into the US in anticipation of tariffs increasing.

“We’re working very closely with our customers, we working very closely with our logistics partners to ensure that what we have available will be in the US ahead of any decision being made by the new US administration,” he said.

The ICMSA AGM heard that Ornua employs around 800 people in the US.

“There is a plan but unfortunately until we can see a little bit more about where the wind is blowing, it’s hard to know which part of the plan that we actually need to put into force,” he said.

Ornua

Commenting on the future outlook for the Irish dairy sector, Galvin noted that there is a period of uncertainty ahead when it comes to nitrates, weather and costs.

The Ornua chief executive said that current forecasts from Irish processors are for a “gradual stabilisation of the milk pool”.

He said that any growth in the future will more likely be supported by better genetics, efficiencies and herd management, rather than volume and stocking rates.

Galvin sounded a note of caution about what potential impact environmental regulations could have on the Irish dairy sector.

When asked by an ICMSA member about the outlook for milk price, Galvin said that the sector will come into the start of 2025 with “a good milk price”.

He added that “a lot of the prospect for the average milk price for the year is going to be predicated on supply”.

Galvin said that an important aspect for the coming year will be where milk supplies land, particularly from the southern hemisphere across their peak and early indications of European milk supply.

“I think average milk price for next year, provided supply doesn’t dwarf the demand that’s there, average milk prices for next year should hold where we were this year, probably even a bit better.

“But that’s an average, that’s across the full 12 months where it falls in the year, I think it could be a challenge,” he said.

Galvin also acknowledged that fixed milk price schemes “have got a bad name”, following the challenges faced by some suppliers signed up to such schemes in 2022 when costs spiraled.

If the sector ever does go back on a wide scale to fixed milk price schemes, he said that they will need to be “more of a margin scheme”, which would “take account of the value of milk, but also the cost of producing it”.

Demand

The meeting heard that there is a growing demand for high quality and nutritious dairy products, global dairy consumption is expected to grow by +1.1% per year for the next 10 years.

Galvin said that the focus for Ornua is on maximising value from every litre of milk and innovation will be key for the future of the Irish dairy.

In terms of the challenges facing the Irish dairy sector, the Ornua chief executive said that maintaining Ireland’s “grass fed advantage” is critical. He said that the success of the Kerrygold brand depends on it.

Galvin said that the sector will have to meet sustainability expectations and market demands, while also challenging and changing negative perceptions around dairy.

Tariffs

Ornua

Demand

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