The NFU has warned surplus milk from Northern Ireland could ‘collapse’ prices if it is dumped on the Great British market in a no-deal Brexit.
At the moment, almost a third of all the milk produced in Northern Ireland is exported to the Republic for processing – between 700 and 800 million litres – but the introduction of tariffs, customs checks and the possibility of regulatory divergence could affect this flow if the UK leaves the EU without a deal.
Last week, Ulster Farmers’ Union president Ivor Ferguson dismissed reports that 45,000 dairy cattle could be culled in such a scenario, but went on to suggest any extra milk no longer processed in the south may be sent to Great Britain.
Chair of the NFU dairy board Michael Oakes told Farmers Guardian if this were to occur, it would hit prices on the mainland.
“Having surplus milk from Northern Ireland which is currently being processed in the south coming into Great Britain would actually damage what appears to be an uncertain market,” he said.
“At the moment, Brexit is being used as the reason, or an excuse, for bringing milk prices down every week.
“This is why we are urging the Government to make sure we do not have a no-deal scenario, because while dairy is potentially not as badly affected as some other sectors, having surplus milk from Northern Ireland could collapse the milk price.”
Independent dairy analyst Chris Walkland pointed out Great Britain lacks the capacity to process displaced milk.
“There is some latent drying capacity in Northern Ireland, but the degree to which it will be a viable option will depend on the export markets for the dried product, or help from Government on storage,” he said.
“If Ireland cannot or will not take Northern Irish milk, then the industry as a whole will have a big problem with surplus milk and I do not rule out some sort of support coming into play, such as export refunds to cover any World Trade Organisation (WTO) tariff, or a milk reduction scheme, or intervention.”
Mr Oakes also suggested processed dairy products from Northern Ireland could be sent to Great Britain if they were excluded from current export markets because of WTO tariffs.
“Commodity traders are talking bullishly about a stable 12 months in the commodity market worldwide, because across most of the rest of the world, production is down, so that has worked in our favour, but we may not be able to access markets because of WTO tariffs of 30-40 per cent,” he said.
“The Northern Irish think they have put in more processing capacity, but they have predominantly been producing for the export market, so it is not just the milk which cannot go south, it is the products they cannot get into markets they are already supplying.”