Processors stockpile ‘Cheddar mountain’ as a Brexit buffer
Ornua has moved six months’ supply to UK warehouses
THE COUNTRY’S largest exporter of dairy products has moved to store over six months of Cheddar cheese in warehousing in the UK as a Brexit buffer.
Cold storage has been at a premium as Irish exporters of Cheddar, butter and powder move to ward off fears of delays portside in the event of a ‘nodeal’ exit.
John Jordan, chief executive of Ornua, said as part of its Brexit readiness, it has been moving Cheddar to storage in the UK ahead of the March 29 deadline.
The production cycle from March to October means stocks of cheese, butter and powder are always stored over the winter period in Ireland.
“We’re now storing in the UK, primarily to avoid logistics issues that we foresee happening through early April, May and June,” said Mr Jordan as he attended a DCU Brexit Institute event.
“They’re all unforeseen so we’ve overcome that and we’ll have a solution for our UK customers.”
Currently over six months worth of stock is in warehousing in the UK, which amounts to around 40,000-50,000 tonnes of product.
Ornua already had a diversification strategy in place before Brexit and its reliance on the UK has decreased over the past decade.
“We’ve been investing in Kerrygold for 25 years in the United States, and now Kerrygold’s the number two butter brand with tremendous opportunity,” said Mr Jordan
However, the UK remains a major importer of Irish dairy produce, with the trade worth around €860m. UK buyers take 115,000 tonnes of cheese worth €367m, and around 65,000 tonnes of butter worth €190m.
Agriculture Minister Michael Creed said a lot of Irish companies have been renting warehousing in the UK. He said the “most lucrative” commodity currently in the UK was warehousing. Mr Creed said the costs of cold storage were of particular concern for smaller companies which may be squeezed out of the market.
Meanwhile, more direct shipping capacity to the continent needs to be put in place to safeguard Irish agri-food exports should Britain crash out of the EU, meat processors and farm leaders have warned.
Ireland is overly dependent on the British land-bridge route to the continent and this could be seriously compromised in the event of a ‘no-deal Brexit’ at the end of March.
“We are extremely concerned by the impact that Brexit could have on the land-bridge route for our exports to the continent in terms of potential additional customs and veterinary checks and major congestion to the Dover-Calais crossing,” said Cormac Healy of Meat Industry Ireland (MII).
Mr Healy said delays at the English Channel would impact on fresh meat deliveries to meat processors’ European customers and “add cost and complexity to the business”.
The MII director pointed out that around 90pc of Irish meat consignments destined for continental Europe use the UK land-bridge, which is the fastest and most cost-efficient route to market.
“We believe that additional ferry capacity direct to the continent will be needed. It is important that fresh supplies to our continental European customers are not disrupted due to Brexit.
“We are discussing this with the Department of Agriculture,” Mr Healy told the Farming Independent.
Agriculture Minister Michael Creed said any question about reliability in delivering to our EU markets would be “big trouble” for Ireland.
He pointed out the landbridge was critical and there have been many bilateral meetings carried out.
Mr Creed said there was sufficient ferry capacity and ships could switch routes if required.
However, he pointed out in terms of time efficiency and existing supply chain logistics that it was the least efficient.
He stated it could take as little as 13 hours from Dublin to the Rungis Market in Paris via Holyhead, Dover and Calais as opposed to more than 30 hours from Dublin to Cherbourg via ferry.
ICSA president Patrick Kent has said the Government needs to be a lot more proactive in ensuring that we have sufficient options.
He warned there was an “over-reliance” on Dublin Port.
ADDITIONAL DIRECT FERRY CAPACITY WILL BE NEEDED IF THERE IS A HARD BREXIT
Ornua CEO John Jordan says it is stockpiling dairy exports in the UK “to avoid logistics issues that we foresee happening through early April, May and June”