Mr. John O'Gorman:

I thank the Deputy for his question, which is very relevant. From a dairy industry perspective, there is huge exposure to the UK market, especially in the context of the cheddar cheese side of the business. As Members are probably aware, about 6.7 billion l of milk are produced in Ireland every year, of which about 700,000 l are consumed domestically, and the rest has to be exported. Approximately 2 billion l of that milk would go into cheddar cheese production alone, and 60% of that goes to the UK. The Irish dairy industry is hugely exposed to the UK market from a cheddar cheese point of view alone. It is natural that the UK market was a target market for the Irish dairy industry traditionally, as we share the same values, the same culture, the same language, the same food tastes and so forth. Cheddar cheese would be regarded as UK-type cheese and there is a limited market for it outside the UK. That would probably be the biggest exposure for the Irish dairy industry in the UK market currently.

A hard Brexit would lead to tariffs somewhere in the region of €1,670 per tonne. To put that into perspective, 13,000 tonnes of Dairygold cheddar go into the UK every year, out of a total production of about 50,000 tonnes. That would equate to about €50 million, which is equivalent to Dairygold's earnings before interest, taxes, depreciation, and amortization for 2018. That is a stark figure for our members, farmers and milk producers and shows how serious this is from an Irish perspective.

We have been led to believe that a soft Brexit would mean tariffs of around €200 a tonne. Outside of the financial tariffs and so forth there will also be costs to transport a product, the delays and the complexity around what has been a very free-moving industry, with 24 hours from the time something is loaded to when it is unloaded in the UK. We are expecting to add at least eight hours to that and that would be in a good outcome. That adds further complexity and further cost to an industry that is ill-equipped to absorb it. The processor works on quite low margins and the consumer is unlikely to absorb the cost, so the person who will be asked to absorb it is the primary producer. That is the fear my members would have.

The Deputy asked what could be done from a Government perspective to try to smooth this over. Export credit insurance would be a great help to the industry as we try to diversify into new markets with new products and so forth. From a production and logistics point of view, capital investment programmes wold be helpful as we try to diversify from cheddar cheese. The UK market will still be a very important market for us going forward but the expansion in milk production that has happened over the past few years is done at this point so it is now about adding value to that growth. As we try to add value to that, there has to be product diversification but also market diversification. Support in that regard would be of great help. My colleague, Mr Mulvihill, from Dairy Industry Ireland might look at this question as well.