Butter bubble drives 17% rise in Strathroy revenue as firm says it could handle a no-deal Brexit
STRATHROY Dairy has said a surge in demand for butter saw a spike in its revenues last year.
The Co Tyrone firm also indicated it believed its all-Ireland structure could shield it from the impact of the Government’s no-deal tariff proposals.
The latest accounts for the family-owned Omagh milk business revealed revenues rose 17% to £77.4m in the year to July 31.
There was also a slight increase in pre-tax profits, which rose to £531,063.
Strathroy employs around 150 people at its processing facility in Tyrone, with a further 50 working across six distribution hubs in the South.
The company processes 100 million litres of milk from farms in the Republic every year and the same volume again from Northern Ireland farmers.
Some 70% of its dairy products are sold in the Republic, with most of them rebranded
and sold by supermarkets such as Lidl, Aldi, Spar and Londis.
Strathroy said its earnings shot up on the back of a so-called ‘butter bubble’.
Growing global demand for butter saw prices hit a €7,000 per tonne high in 2017, remaining inflated throughout 2018, reaching €6,100 per tonne in June.
Prices have now returned to around €4,000 per tonne.
“That has been driving the huge increase in the price of butter and that is reflected then in our company accounts,” said a spokesman.
Like most firms, the Co Tyrone dairy is planning for the worst Brexit outcome while at the same time hoping for the best.
“We’re an all-island company, which is why Brexit is a headache. We have milk travelling in both directions 24 hours a day,” said a senior figure at the firm yesterday.
With a concentration of farm suppliers on the south and east coast of Ireland, the company’s preferred position is to remain within the EU — something which it currently considers to be a long shot.
But the senior figure said he believes Northern Ireland could benefit under Theresa May’s deal by having a foot in both the UK and EU.
Despite its concerns, the dairy said its business structure should shield it from the impact other food processors could face under the Government’s cross-border tariff proposals in the event of a no-deal exit.
Those proposals would place no tariffs on goods coming north but could see businesses here hit by tariffs in the other direction.
Strathroy Dairy believes it should still be able to transport milk sourced in the Republic to its Omagh processing plant and send the product back across the border for distribution, even in a no-deal scenario.
That would require the firm to transfer ownership of its business to its entity in the Republic and would be dependent on the UK being granted third-country status by the EU.
“While there would be pain, it’s pain we could stomach,” a spokesman said.
Describing the current status of the negotiations as “a shambles”, the spokesman added the entire Brexit episode had been “a complete waste of time” for businesses.
“Regardless if you’re selling potatoes (or) farming sheep, it has distracted everybody from the bottom to the top for the last three years,” he said.
“Everybody has been trying to grow with one hand tied behind their backs for the past three years.”