At an event held today at the London School of Economics (LSE), pan-European dairy cooperative Arla Foods has warned that if the findings of a LSE report prove true, non-tariff barriers to trade and restricted access to labour after Brexit will leave British consumers facing a dairy dilemma which could see the availability of butter, yoghurts and cheese become restricted.
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 this is still to be agreed with the EU, and as is identified in the report from the LSE, The impact of Brexit on the UK dairy sector, any friction and any limitations on access to key skills will mean that UK consumers pay the price through less choice, higher prices, and potentially lower food standards.
Arla Foods say that the issues identified in the LSE report mean a dairy dilemma in the UK, with three possible outcomes:
- That it will become much more difficult to import dairy products from Europe, leading to a shortage both of dairy staples and particularly of products such as speciality cheeses, where domestic supply is constrained by limited production capacity in an already tightly managed supply chain.
- Escalating pressure on costs, and ultimately increased consumer prices for dairy goods. Current dairy imports include cheese, butter, butteroil, whey, buttermilk and fermented products, yoghurt, concentrated milk, powders, milk and cream, infant formula and ice cream meaning that the impact could be widespread.
- That ways are found somehow to ramp-up production and cut farm costs, which in the short-term at least would inevitably undermine the world-leading standards of our dairy industry – something neither farmers nor consumers would accept.
This is in addition to costly impacts throughout the supply chain, problems that could be exacerbated by a shortage of vets, lorry drivers and farm workers post-Brexit. Amongst the issues caused by non-tariff barriers and unavailability of key labour the report identifies:
- Increased times for customs inspections at UK ports, with even a seven-minute additional waiting period for each inspection adding 10 hours of delaysand 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 millionexpected post-Brexit.
- Further additional costs due to subjecting products of animal origin (POAO) such as dairy to checks at the border – if, indeed, border posts are equipped to do such checks at all.
- A particularly acute challenge caused by increased veterinary checks at the same time as the number of vets decreases as a result of Brexit, leading to a growth in workload of 372 per centfor vets at the border – with “no certainty that the system will continue to function adequately given these additional pressures”.
- 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 comments: “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.”