Britain could face a “dairy dilemma” with restrictions in the availability of butter, yoghurts and cheese in the short term, even if it secures a “softer departure” and a trade deal with the European Union.
That’s the claim from pan-European dairy co-operative Arla Foods UK, which has publicised the findings of a report it commissioned the London School of Economics (LSE) to undertake.
The government’s white paper on the UK’s future relationship with the EU sets out proposals to ease trade between this country and Europe but Arla warned that this was still to be agreed with the EU, while LSE report cautioned that any friction and any limitations on access to key skills could push up prices and potentially lower standards.
The report, entitled The impact of Brexit on the UK dairy sector, highlighted how the UK has the second-largest dairy trade deficit in the world at up to 16% (with 98% of the UK’s dairy imports of EU origin).
It warned that the reliance on EU imports meant that any problems at the border post-Brexit and shortages of labour in key areas were likely to have a “major and predominantly negative” effect on the domestic market in the form of shortages and higher prices.
Among the issues it claimed could be caused by non-tariff barriers and unavailability of labour were:
- Increased times for customs inspections at UK ports. The report estimated that even a seven-minute additional waiting period for each inspection would add 10 hours of delays and additional costs of at least £111 per container.
- Risks of additional delays thanks to asking the UK’s new Customs Declaration Service, designed to handle only 150 million declarations per year, to handle the more than 250 million expected post-Brexit.
- Further additional costs due to subjecting products of animal origin (POAO) such as dairy to checks at the border.
- The challenge caused by increased veterinary checks at the same time as the LSE claimed the number of vets would decrease as a result of Brexit.
- Rising costs as EU-national lorry drivers and farm workers return home due to the fall in the value of the pound and other Brexit-related issues.
Ash Amirahmadi, UK managing director, Arla Foods UK said: “The farmers that own the Arla dairy cooperative already balance keeping consumer prices down with maintaining quality and the best standards, including high animal welfare.
“There’s no margin to play with here in the value chain. Any disruption means that if we don’t get the practicalities of Brexit right we will face a choice between shortages, extra costs that will inevitably have to be passed on to the consumer or undermining the world-class standards we have worked so hard to achieve.”
He added: “Our dependence on imported dairy products means that disruption to the supply chain will have a big impact. Most likely we would see shortages of products and a sharp rise in prices, turning every day staples, like butter, yoghurts, cheese and infant formula, into occasional luxuries. Speciality cheeses, where there are currently limited options for production, may become very scarce.
“It is important to be clear about this: Brexit might bring opportunities to expand the UK industry in the long term, but in the short and medium term we cannot just switch milk production on and off. Increasing the UK’s milk pool and building the infrastructure for us to be self-sufficient in dairy will take years.”