A dairy boss has called for a "political decision" so that farmers here can continue benefiting from the export of products made with their milk from the Republic at the end of the Brexit transition period.
Mike Johnston, the NI Dairy Council's chief executive, said the trade is worth around £200m a year to its dairy farmers. But he said that after the end of the transition period in 44 days time, Northern Ireland will no longer have access to the trade as farmers will not be able to avail of the EU's Free Trade Agreements.
Around one-third of the milk produced in Northern Ireland - around 800 million litres a year - is transported into the Republic by dairy co-ops and manufactured into other value-added products like butter and milk powders.
Some are brought back into Northern Ireland or sent to Great Britain, but other products are sold into the EU or exported into third countries under EU Free Trade Agreements (FTAs).
Mr Johnston said: "It's quite a complex trade flow but the milk has to go south because we don't have the capacity to process all of that.
"It's evolved for over 20 years since the Good Friday Agreement and it's been possible because we are in the EU and we have free movement on the island, and our milk is produced to the same standards as the EU."
He said that at the time of the Withdrawal Agreement and NI Protocol were first announced, NI farmers had expected to be able to avail of both the EU FTAs and future UK FTAs.
But he said: "We were then told at the start of this year by the European Commission that under the protocol, NI milk would not have access after January 1 to EU FTAs, or any future market support measures from the EU. That pulled the rug from under us and it's a major concern we have been working on to try and get this position changed.
What we need is a decision by the EU at political level that mixed origin products manufactured in the Republic of Ireland with milk from NI will have access to EU FTAs."
A spokesman for the Department of Agriculture, Environment and Rural Affairs, said: “The Minister Edwin Poots has written to the Department of Environment, Food and Rural Affairs Secretary of State, Rt Hon George Eustice MP in order to ensure UKG is fully aware of this issue.
“There are potential solutions and these are being pursued.”
Lakeland Dairies, based in Cavan, is one of the biggest cross-border processors of milk, and collects milk from around 1,300 Northern Ireland farmers.
A spokesman he could not enter a detailed discussion but said: “Lakeland Dairies has processing facilities for milk on both sides of the border and has been operating successfully in Northern Ireland for 25 years. In that time, we have grown to become the largest dairy co-operative in Northern Ireland.
“To continue the growth of our business and the prosperity of our farm families, we wish to see a continuation of the free trade, which has served the dairy industry well, into the future.
“This is the preferred outcome for the dairy industry operating across the Republic of Ireland, Northern Ireland and Great Britain.”
A spokesman for the Republic’s Department of Foreign Affairs said: The issue of NI goods access to EU FTAs is something that has been raised with us by a range of stakeholders.
“While we fully recognise the challenges of origin rules for traders, we must also be clear that this is an extremely complex issue that presents a number of challenges.
“Not all the building blocks required in order to make progress are in the hands of Ireland or even of the EU. We will remain strongly engaged on this issue including with our EU partners, but we must be clear on the very complex and real challenges around progress in this area, and that the current position is that NI goods and inputs have UK origin.”
It’s understood the European Commission is aware of the concerns of Northern Ireland dairy farmers when it comes to future market access. Last year it said there was nothing in the protocol to prevent the UK from including Northern Ireland within the scope of future FTAS, where they did not prejudice the application of the protocol.
A Co Down food boss has warned prices of pre-packed sandwiches could go up due to the impact of the Northern Ireland Protocol on the cost of ingredients when the Brexit transition period ends in 45 days time.