From cow to cup: Brexit and the threat to your milk’s cross-Border journey

The Farmer

PJ McMonagle supplies Strathroy Dairy in Northern Ireland with about 800,000 litres of milk every year from his farm in Aughnakeeragh, Co Donegal.

The produce from his 120 cows crosses the Border twice before reaching shops in the Republic.

The 51-year-old previously supplied a creamery in the State but as a result of low milk prices he decided to move to the Omagh company more than eight years ago.

Now he is faced with potential disruption to his business as the UK finalises the terms of its withdrawal from the EU, which some fear could result in the return of a hard Border between Northern Ireland and the Republic.

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Mr McMonagle's 250-acre farm is located just outside the east Donegal town of Raphoe, approximately 10 minutes away from the Border near Strabane.

He believes some of his northern counterparts in the dairy industry might have voted to leave the EU due to its strict farming rules, including controls on slurry spreading and time-consuming paperwork.

The father-of-three, who was the first farmer in the Republic to sell milk to Strathroy Dairy, told The Detail: "I've spoken to people in the North who voted to leave and they said if they'd sat back and looked at the situation right they wouldn't have voted that way.

“They were brainwashed into thinking they would be better off on their own and, when they look at it now in the cold light of day, they know they would have been better off voting to stay. I’m sure if there was a new referendum it would be a clear run for staying in the EU.”

However, Mr McMonagle is critical of the amount of EU bureaucracy farmers currently have to deal with.

“The EU needs a bit of a wake-up call because the red tape has got unreal as far as farmers are concerned,” he said.

"The department knows more about me than I know about myself. They know every animal that I have, how many acres I have; they know what's on the land, in every field, and people probably felt we would be better off without them. Hopefully this is a wake-up call to sit up and watch what they're doing because the red tape across Europe is madness."

We've always been aligned to Northern Ireland rather than southern Ireland, so the minute you put up a hard Border it's just a nightmare

Despite these concerns, Mr McMonagle credits the EU with improving food traceability for the consumer and fears what could happen if tariffs are introduced on products crossing the Border post-Brexit.

He receives a base price of about 31 cent plus VAT for every litre of milk he sells to Strathroy, which then sells a 2l jar in the Republic at about €1.50.

“If there’s a tariff on that milk it’s going to be at a higher price so people are going to buy a similar product that’s cheaper,” he added.

Male calves born on Mr McMonagle's farm are sold to local beef farmers or exported to the Netherlands via England to be sold as veal – a process which he fears could potentially face long delays as a result of increased animal welfare and customs checks after the UK leaves the EU. "A hard Border would be the worst-case scenario. I do business in the North, buy animal feed in the North, my milk goes to the North. Being so close to the Border, you're using contractors coming out of the North, you buy some of your parts in the North.

“It’s much easier to get to Strabane or Derry than it is to Dublin. We’ve always been aligned to Northern Ireland rather than southern Ireland, so the minute you put up a hard Border it’s just a nightmare.

“I would hope we could continue as we are, but selling our product will probably become more difficult if there’s any kind of a tariff between us and England.

"If you want to sell sheep meat or beef, and maybe even milk, and they put any kind of tariff on that, then I’m not getting the price for my product, so that puts my business under pressure. That’s what I see happening.”

Cost of no-deal

Strathroy Dairy, a Northern Ireland dairy processor that gets 60 per cent of its milk from farmers in the Republic, has warned of the dangers of the UK "crashing out" of the European Union without a deal.

The company processes all its milk at its plant in Omagh, Co Tyrone, before it is delivered to more than 2,000 retailers across the Republic and about 400 in Northern Ireland via a network of distribution depots.

Of the 257 farms supplying milk to the firm, 82 per cent — or 211 — are based in the Republic while the remaining 46 are in Northern Ireland.

The family-run company imports about 100 million litres of milk from the Republic every year. All the milk it collects from dairy farmers in the Republic returns across the Border after being processed in Co Tyrone, while the rest of its milk is bought and sold in Northern Ireland.

Strathroy fears a no-deal Brexit on March 29th could force it to invest millions of pounds in a second plant south of the Border which, it warns, could result in its Northern Ireland workforce being halved.

Commercial director Eamon Lynch told The Detail: "It's never something we've needed before because we have the capacity in Omagh and because we have a distribution network throughout Ireland. Now we have to think about it because of Brexit.

"If we ended up with the UK crashing out on the so-called no-deal, with hard Borders going in and tariffs on milk coming into play in World Trade Organisation (WTO) terms for example, we would then have to consider a plant in the South because pricing and competition would cause us problems otherwise."

Mr Lynch added: “Current WTO tariffs are particularly penalising on the agrifood sector and as much as 30 per cent on milk. This would add a level of cost that would be potentially crippling. Add that to the additional paperwork and bureaucracy that a no-deal scenario would entail. The milk market is incredibly competitive and the smallest increase in costs can negatively impact on already tight margins.

“If we were to increase our price by a penny on a jar we could potentially lose contracts over it.”

Owned by the Cunningham family, Strathroy has been making dairy products in Omagh since 1850. It supplies to a range of wholesalers and shops, including Lidl, SuperValu, Tesco, Sainsbury's and Costcutter.

The Republic exported 93,354 tonnes of milk, worth €24.5 million, to Northern Ireland during 2017, while 661,821 tonnes of milk with a value of €221.8 million travelled in the opposite direction, according to the Department of Agriculture, Food and the Marine.

Strathroy’s business does not just rely on the EU’s free movement of goods and tariff-free rules for its milk and cream products, but also for its milk cartons, which it makes on site using plastic beads imported from the Netherlands.

The company’s workforce of about 200 employees is made up of people who live on either side of the Border, as well as a number of European nationals, although this second group has dwindled over the past two years, according to Mr Lynch.

He said: “I think a number of them always had the intention of going home again at some stage, which is understandable. They were here to do a job and maybe, depending on which country they’re from, the time was right for them to go back.

“I think there’s a certain fear around what’s going to happen to their rights etc post-Brexit so I think some have left because of uncertainty of what the future holds.”

Mr Lynch supports statements from the Confederation of British Industry and farmers’ unions “about the importance of actually agreeing to the deal that is currently on the table in relation to Brexit because of the impact a no-deal can have on business.

“It genuinely has nothing to do with unionist and nationalist politics. It’s commercial business.”

The stats

• €2.47 billion – The forecast value of the Republic of Ireland's milk output this year, according to initial estimates published by the Central Statistics Office earlier this month.
• 1.4 million – The number of dairy cows supplying that milk.
• 310,700 – The number of dairy cows in Northern Ireland in June this year, according to Stormont's Department of Agriculture, Environment and Rural Affairs.
• £662 million – The total gross output contributed by dairy in Northern Ireland in 2017.
• 2.3 billion litres – Raw milk production from farms in Northern Ireland during 2017.

The journey of milk

Day 1, 6am: MILKING (Aughnakeeragh, Co Donegal): PJ enters the milking parlour for the first milking of the day. The cows will return at 4pm to be milked again. About 500 litres of milk can be taken from 75 cows in any one milking session. There are usually approximately 2,000 litres of milk waiting to be collected from PJ's farm by processor Strathroy Dairy.

Day 1, 2pm: COLLECTION (Aughnakeeragh, Co Donegal): Strathroy Dairy collects PJ's milk every other day and it is pumped into a tanker with milk from about half a dozen other farms located in the Republic.

The driver takes a sample from each site he visits and if the milk fails to pass the testing stage the origin of the contamination can be traced.

Milk taken from PJ’s farm will travel at least 45km before it reaches the processing plant in Omagh. It will cross the Border into Northern Ireland about 15 minutes into the journey.

All milk bought by Strathroy is processed in Omagh, but milk from the Republic will be kept separate from milk sourced in Northern Ireland.

Day 2, 7am: PROCESSING (Omagh, Co Tyrone): The first port of call for Strathroy's tanker drivers is a small lab to the front of the main building, where a sample of milk from each load undergoes a number of tests.

Business at Strathroy had finished for the day by the time PJ’s milk arrived shortly after 4pm the day before, so it was stored until morning.

Approximately 85 per cent of the company’s milk is sold in 2l plastic containers which it makes on site using the plastic beads it imports from the Netherlands. It takes seconds to fill one of the jars with pasteurised liquid milk. The jars are then moved quickly along a production line to have a label added before being loaded onto trollies.

A 40ft lorry awaits beside an adjoining warehouse and typically transfers about 104 trollies – or 8,320 2l jars – of milk to a network of distribution depots across Ireland. PJ’s milk is included in a load bound for Cavan.

Day 2, 11am: DISTRIBUTION (Cavan): The 89km journey between Omagh and Strathroy's distribution centre in Cavan should take about an hour and a half, with PJ's milk crossing the Border back into the Republic just over an hour after it leaves the processing plant.

On arrival, the trollies will be taken into the depot to be stored overnight before the milk is delivered to local retailers in the morning.

Day 3, 5am: DELIVERY (Cavan): Loading the delivery lorries begins at 4.30am, with the first shop receiving its supply of milk half an hour later – about 48 hours after it was milked from PJ's cows.

A lorry with a full load could deliver to up to 50 different shops in the Republic.

“As we operate now there is no Border, so anything that can put a hiccup or hindrance on that is going to impact negatively on how we do our business,” Mr Lynch says.

"It's been very easy because north or south of the Border we've all been in the same trading block – we're all part of the European Union. Everything moves freely backwards and forwards. If we lift milk in Strabane or Lifford, it doesn't matter to us.

“Suddenly [post-Brexit] we might have to be thinking about that in a totally different way.”