As Brexit negotiations come down to the wire, Ornua CEO John Jordan has warned that a hard Brexit will affect its business which will have a knock-on effect on Irish milk prices.
Speaking at the ICMSA AGM, he said the UK accounted for 25% of Ornua’s exports and while the company had diversified over the last decade, particularly into the US, no market could really replace the UK.
“Overall a hard Brexit will have a significant impact on Ornua. It will have significant impact on the return of our products and ultimately will have a significant impact on milk price,” Jordan told the 120 farmers tuned in to the AGM.
“There is no market that can directly replace the UK. Returns from the market are good and [the UK is] a particularly good cheddar consumer.”
Jordan said Ornua had looked at ways of mitigating the impact of Brexit, taking pre-emptive measures and moving stock to the UK in advance of the Brexit deadline. He said part of this was to avoid any supply chain delay.
He warned there is the potential for a bad economic crisis in the UK, which would be a concern for dairy demand and for Ornua as a business. It has four manufacturing sites in the UK and over 1,000 employees.
“If there is a hard Brexit with WTO tariffs, for Ornua it will cost us over €100m per annum. Even a soft Brexit will add costs in doing business and make us less competitive.”
Milk price upside
Ornua does, of course, bring a premium product to market and that should help insulate any catastrophic economic crisis for Irish milk suppliers.
Joran outlined that in the US a pound of Kerrygold butter retails for $8 versus $4 for a pound of own-label butter. In Germany 250g of Kerrygold sells for €2.39 versus €1.39 for own-label butter, and in Ireland Kerrygold retails at €3.75 versus €2.19 own-label butter.
Referring to this in her presentation, Bord Bia’s Tara McCarthy said the Kerrygold butter story is an example of where she hoped the PGI story might go for grass-fed Irish beef.
With early warning signals on 2021 milk price, markets and other indicators seem to be moving in the other direction. New Zealand is in peak milk supply and last week Fonterra forecast a higher milk payout than anticipated.
This will bring farmgate milk price for Fonterra suppliers closer to $7/kg milk solids (28 c/l currency and solids corrected).
This comes on the back of another strong GDT auction result last week (up 4.3%) and will put more confidence back into the market as Irish board members meet to set November milk price.
Read more
Hard Brexit will have ‘significant impact on milk price’ - Ornua boss
Fonterra strengthens milk price forecast
Markets stable as dairy retail sales up
As Brexit negotiations come down to the wire, Ornua CEO John Jordan has warned that a hard Brexit will affect its business which will have a knock-on effect on Irish milk prices.
Speaking at the ICMSA AGM, he said the UK accounted for 25% of Ornua’s exports and while the company had diversified over the last decade, particularly into the US, no market could really replace the UK.
“Overall a hard Brexit will have a significant impact on Ornua. It will have significant impact on the return of our products and ultimately will have a significant impact on milk price,” Jordan told the 120 farmers tuned in to the AGM.
“There is no market that can directly replace the UK. Returns from the market are good and [the UK is] a particularly good cheddar consumer.”
Jordan said Ornua had looked at ways of mitigating the impact of Brexit, taking pre-emptive measures and moving stock to the UK in advance of the Brexit deadline. He said part of this was to avoid any supply chain delay.
He warned there is the potential for a bad economic crisis in the UK, which would be a concern for dairy demand and for Ornua as a business. It has four manufacturing sites in the UK and over 1,000 employees.
“If there is a hard Brexit with WTO tariffs, for Ornua it will cost us over €100m per annum. Even a soft Brexit will add costs in doing business and make us less competitive.”
Milk price upside
Ornua does, of course, bring a premium product to market and that should help insulate any catastrophic economic crisis for Irish milk suppliers.
Joran outlined that in the US a pound of Kerrygold butter retails for $8 versus $4 for a pound of own-label butter. In Germany 250g of Kerrygold sells for €2.39 versus €1.39 for own-label butter, and in Ireland Kerrygold retails at €3.75 versus €2.19 own-label butter.
Referring to this in her presentation, Bord Bia’s Tara McCarthy said the Kerrygold butter story is an example of where she hoped the PGI story might go for grass-fed Irish beef.
With early warning signals on 2021 milk price, markets and other indicators seem to be moving in the other direction. New Zealand is in peak milk supply and last week Fonterra forecast a higher milk payout than anticipated.
This will bring farmgate milk price for Fonterra suppliers closer to $7/kg milk solids (28 c/l currency and solids corrected).
This comes on the back of another strong GDT auction result last week (up 4.3%) and will put more confidence back into the market as Irish board members meet to set November milk price.
Read more
Hard Brexit will have ‘significant impact on milk price’ - Ornua boss
Fonterra strengthens milk price forecast
Markets stable as dairy retail sales up
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