UK May Face Price Hikes, Scarcity of Dairy Products after Brexit, Study Says
The LSE study warns that even if Britain leaves the EU with a Brexit deal, imports of dairy products could still be looking at import delays.
Dairy products such as cheese, butter, and yogurt could become “luxuries” in the UK after it leaves the European Union as it relies substantially on EU imports, a study has found.
Brexit is likely to mean major price increases for dairy items could be caused by even the slightest disruptions in deliveries, while specialty cheeses could become scarce in Britain, according to a report by the London School of Economics commissioned by the company behind Lurpak, Anchor and Arla brands.
The LSE research found that Britain could face escalating costs of dairy products in general regardless of the specific provisions of the Brexit talks between London and Brussels.
“Our dependence on imported dairy products means that disruption to the supply chain will have a big impact,” said Ash Amirahmadi, the UK managing director of Arla Foods.
“Most likely we would see shortages of products and a sharp rise in prices, turning everyday 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,” he added.
The start of the Brexit negotiations over a year ago has inspired warnings that leaving the EU could usher in a period of insecure, unsafe, and price food supplies for the UK, exposing its own deficit in food production, The Guardian reports.
Since the UK does not satisfy on its domestic consumption of dairy products, it is dependent on EU imports, especially from dairy-surplus countries such as Ireland, Germany, France, Belgium and Denmark.
A no-deal Brexit scenario in which Britain resorts World Trade Organization rules to govern is trade is “almost certain” to result in price hikes for dairy products which are subject to high tariffs: up to 74%.
The LSE study warns, however, that even if Britain leaves the EU with a Brexit deal, imports of dairy products could still be looking at import delays at Dover generating higher costs.
Rules of origin certificates and veterinary controls are also expected to make imported dairy more expensive.
“Fuel costs, lorry maintenance, loss of perishable goods shelf life and increased wages of lorry divers, mean the above figures [are] at the lower end of the likely range,” finds the LSE.
Its research also says that the negative effects of Brexit with respect to the dairy trade would not be limited to the UK as smaller suppliers from France and Italy might find that their products are not competitive in Britain.
Ash Amirahmadi, of Arla Foods, the UK’s largest dairy company, is quoted as saying that while Brexit could create growth opportunities for the British dairy industry, those could take years to materialize.
“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,” he said.
“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,” Amirahmadi elaborated.
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