Pan-European dairy company and cooperative Arla Foods has warned of a post-Brexit “dairy dilemma” which could see UK consumers faced with higher prices and less choice.
The cooperative, owned by 11,200 dairy farmers with circa 2,400 of whom are British, said at an event held at the London School of Economics (LSE) that if findings released in a report by the university were true, non-tariff barriers to trade and restricted access to labour after Brexit will leave British consumers experiencing restrictions on the availability of dairy products.
The report said the UK has the second-largest dairy trade deficit in the world at up to 16%, and 98% of the country’s dairy imports are of EU origin. The government’s White Paper on the UK’s future relationship with the EU sets out proposals to ease trade but is yet to be agreed.
The report also suggested that 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 predicted three possible outcomes in response to LSE’s findings, with the first being that it will become more difficult to import dairy products from Europe, leading to a shortage in dairy staples thus constraining domestic supply.
The second, there will be a widespread increase of pressure on costs ultimately leading to higher consumer prices for dairy goods. The third, if methods to ramp up production and cut farm costs were discovered, it will inevitably undermine the standards of the dairy industry.
The report also identified potential issues caused by non-tariff barriers and unavailability of key labour including increased times for customs inspections, adding 10 hours of delays and additional costs of £111 per container.
It also predicted further additional costs due to subjecting products of animal origin (POAO) such as dairy to checks at the border, as well as an 372% increased workload for vets at the border due to labour shortages. The report said that the UK could see 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 of 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.
“Our dependence on imported dairy products means that disruption to the supply chain will have a big impact. To protect the British public we are calling on both sides in the negotiations to be pragmatic and sensible as they address the practicalities of Brexit, allowing us to have frictionless customs arrangements and ready access to key labour in the years ahead.”