{"id":78267,"date":"2018-05-16T21:40:06","date_gmt":"2018-05-16T21:40:06","guid":{"rendered":"http:\/\/www.bnreport.com\/irelands-desperate-bid-to-brexit-proof-its-dairy-industry-10\/"},"modified":"2018-05-16T21:40:06","modified_gmt":"2018-05-16T21:40:06","slug":"irelands-desperate-bid-to-brexit-proof-its-dairy-industry-10","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/irelands-desperate-bid-to-brexit-proof-its-dairy-industry-10\/","title":{"rendered":"Irelands desperate bid to Brexit-proof its dairy industry"},"content":{"rendered":"

EAST FERRY, Ireland \u2014 A bold plan by one of Irelands largest dairy businesses to shield itself from Brexit has hit a road block: angry locals.<\/p>\n

The fight over the \u20ac77 million Dairygold project neatly encapsulates the difficulties Ireland faces as its closest trading partner leaves the EU single market. The U.K. buys \u20ac4.5 billion of Irish food and drink exports a year, roughly 35 percent of the total \u2014 a market at risk under the feared scenario of high customs tariffs between the U.K. and Ireland after Brexit.<\/p>\n

Businesses hedging against the possibility of increased trade friction are looking further afield. For the Dairygold cooperative, the plan is to shift production from making cheddar destined for British consumers to cheese popular in new markets \u2014 in this case, Norwegian Jarlsberg for North America, Australia and the rest of the EU.<\/p>\n

The Irish firm has teamed up with Tine SA, Norways largest farmer-owned dairy cooperative, to build a new plant capable of processing 20,000 tons of Jarlsberg a year.<\/p>\n

But the project, which was granted planning permission<\/a> last month on a site in the village of Mogeely in County Cork, has raised fierce local objections.<\/p>\n

\n

Up to 65 percent of Irelands cheddar cheese exports go to the U.K.<\/p>\n<\/blockquote>\n

Residents are worried the factorys outflow from a 10.6 kilometer underground pipeline will pollute the pristine waters in the tranquil Ballinacurra River estuary, harming wildlife, salmon stocks, an oyster farm and children in the local rowing club who use the bay.<\/p>\n

\u201cIf you have the wind blowing here and you come down and see those windows, youll see all the salt water on them. Now theyll have grease as well,\u201d says Benedict Deady, who jokes that he was named after the pope and has run the local rowing club for the past six years. \u201cIts oil and stuff that theyll be pumping into this place,\u201d he said, voicing local peoples worst fears about what will be coming down the pipe if the project goes ahead.<\/p>\n

Conor Galvin, head of commercial business development and innovation at Dairygold, said the factorys waste will fully comply with environmental rules. He points out that An Bord Plean\u00e1la, Irelands urban planning authority, as well as the countrys water and environmental bodies have signed off<\/a> on the project.<\/p>\n

\u201cThe waste is treated in a way that the Irish water authority and the EPA [Environmental Protection Agency] say they are happy with and it is compliant with standards in Ireland,\u201d he says, adding that he expects work to start on the factory within three months.<\/p>\n

<\/p>\n

The Ballinacurra river estuary in County Cork | Simon Marks<\/p>\n

Charlie Haynes, a member of the residents group in East Ferry fighting the project, says discussions are underway among locals about appealing the planning decision to Irelands Supreme Court.<\/p>\n

That happened in the case of Apples planned \u20ac850 million investment in a data center in Athenry, near Galway, which was approved in February 2015 and was fought by locals through the courts for years.<\/p>\n

\u201cTheres salmon that goes up there in season. Theres sea bass, which is a protected species. Theres otters here, theres kingfishers. Its a place full of wildlife and we would be very suspicious of anything that might damage the water further,\u201d Haynes says during an interview in his garden surrounded by his three dogs.<\/p>\n

Like several locals here, Haynes says wastewater pumped into a thin stretch of inland water that his home overlooks would never make its way out to the ocean due to strong currents and a narrow mouth leading out to sea from the nearby harbor, instead remaining trapped. \u201cAll local experience is that things dont go out,\u201d he says.<\/p>\n

Bad timing<\/h3>\n

The Dairygold venture comes at a difficult time for the industry. Up to 65 percent of Irelands cheddar cheese exports go to the U.K. along with large shipments of butter and infant formula. In total, 30 percent of Irelands dairy production is sold to the U.K, according to Bord Bia<\/a>, the Irish Food Board.<\/p>\n

Interviews with farmers and executives at some of Irelands largest dairy companies paint a familiar picture. In a nutshell, there is no obvious panacea for Irelands exposure to the British market should Brexit trade talks go sour.<\/p>\n

<\/p>\n

Larry Hannon tends to his herd of cows on his farm in County Kildare | Simon Marks<\/p>\n

\u201cYou cant think youre going to shift big volumes into the European market overnight because the market is already supplied. Just take Emmental, its a French thing and there are French companies doing it. Why go into a market thats probably overcrowded anyway?\u201d asks Padraig Walsh, who rears more than 300 cows in the Irish midlands selling 80,000 tons of milk powder per year to Glanbia, the countrys largest cooperative.<\/p>\n

Walsh, who was president of the Irish Farmers Association between 2006 and 2010, says that while Ireland is increasing exports to countries beyond the U.K., nothing can quite make up for the benefits of trade access to the U.K.<\/p>\n

\u201cThe U.K. market is so important to us as it has a similar taste. And also its so close, its the same culture, the same language,\u201d he says. \u201cFair enough, weve managed to develop markets all over the place at this stage, but you wont shift the volumes [going to the U.K.].\u201d<\/p>\n

For many farmers in Ireland, the idea of diversifying into new markets is something they have little control over as they are wholly dependent on the countrys cooperatives to market the products derived from their milk.<\/p>\n

\u201cAt farm level were all very focused on producing more of the same thing. Its a very narrow focus. Its about volume as opposed to markets,\u201d says Larry Hannon, who supplies 1.4 million liters of liquid milk to Glanbia from his farm in Ballitore, County Kildare. \u201cAm I looking at changing my business to mitigate against Brexit? No, because there is nothing I can do to do that,\u201d he says, tucking into a plate of Irish steak, potatoes and grilled tomatoes in his kitchen.<\/p>\n

Lannon explained that producing more infant milk formula for the Asian market is often cited as a way to shelter the dairy market from Brexit. But doing so requires producing and selling huge volumes to add value for farmers, as the margins are so low.<\/p>\n

\u201cYoure talking big volumes,\u201d he says, noting that Dairygolds decision to produce Jarlsberg is a rare tale of hope for Irish farmers trying to hedge their bets in light of Brexit. \u201cTo add real value to my bottom line, I dont know where thats going to come.\u201d<\/p>\n

New markets<\/h3>\n

While farmers have doubts about the future, those in the government are more optimistic. Shane Hamill, who overseas Brexit issues and international trade at Bord Bia, says the countrys dependency on the U.K. is in fact decreasing.<\/p>\n

Exports to the EU not including the U.K. increased by 16 percent to \u20ac4 billion in 2017, while exports to the rest of the world went up by 17 percent to \u20ac4.1 billion. Meanwhile, exports to the U.K. grew just 7 percent in the same year. So Irelands food exports to the U.K. made up for 35 percent of the total in 2017, down from 37 percent the previous year<\/a>.<\/p>\n

Hamill says Bord Bia has implemented a \u201cmassive market diversification exercise\u201d with industry looking at consumer trends, market dynamics, the cost of doing business, regulatory issues and distribution channels in markets in Asia, the Middle East and Africa. The body has also opened the Thinking House, a resource center for businesses looking to access new markets.<\/p>\n

<\/p>\n

The production site for the Dairygold cooperative in Mogeely, County Cork | Simon Marks<\/p>\n

Glanbia, he says, is looking at producing more of cheeses such as Edam and Gouda, while Teagasc, the Agriculture and Food Development Authority, has partnered with Ornua, a huge marketer of Irish dairy products, to research the kind of tastes and textures of dairy products enjoyed in China.<\/p>\n

\u201cThere are some actions taking place,\u201d he says. \u201cBrexit has meant that we are putting in a lot more resources to make sure that the diversification process is faster.\u201d<\/p>\n

But as Dairygold has discovered, there will be obstacles to overcome at home as well.<\/p>\n

\u201cTheyre like a Rottweiler,\u201d says Deady, the local resident in East Ferry, when asked if the locals would allow the companys Jarlsberg investment to go ahead. \u201cWhen they grab on to you they wont let go.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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