In 2015, dairy exports from Northern Ireland were valued at £154m, about 15% of total sales.
Of that, exports to the Republic of Ireland were worth more than £60m.
The report said NI businesses are heavily reliant on cross-border exports of raw milk and processed products to the rest of the EU.
Hard border
The report, by the industry body Dairy UK, says the relationship between dairy industries on both sides of the border goes beyond issues of trade.
Dairy co-operatives in the Republic of Ireland own factories in Northern Ireland which process approximately 60% of milk in Northern Ireland.
The report said it is essential that, in future, «two-way access» is maintained for dairy produce without tariffs or other trade barriers.
It said a «hard border» would be the «least desirable» option for the diary industry and failure to avoid it would create «uncertainty» for the industry.
On the other hand it said a «soft border» could become a template for future trading arrangements between the UK and the EU.