Dairy products could become ‘luxuries’ after Brexit, industry warns

Non-tariff barriers alone after Brexit could raise the price of dairy products in the UK, which may become “luxuries”, warned a report on Thursday.

A study by the London School of Economics Consulting — commissioned by Arla Foods, the dairy co-operative behind Anchor butter and Lurpak spreads — found that delays at the border between the UK and the European Union and reduced access to key industry workers could restrict the availability of butter, yoghurts and cheeses, and cause price rises.

The effects would be on top of any import and export tariffs imposed on dairy products as part of a final exit deal. If the UK crashes out of the EU without a deal, high tariffs are likely to raise the price of dairy products even more, the report said.

“The probability of the UK and the EU reaching a deal in their negotiations seems to change every day, but this report makes clear that even with an agreement over trade and a ‘softer’ departure from the European Union these major issues remain, posing a dilemma for the British dairy industry at large,” said Arla.

Some 98 per cent of the UK’s dairy imports come from the EU, according to the LSE. British industry leaders have repeatedly warned the government that border delays could be extremely costly, particularly for just-in-time supply chains, and that restricted access to labour is likely to cause worker shortages.

The report found that even short delays at the border would be significant: if each customs inspection increased by seven minutes, this would add 10 hours of delays and additional costs of at least £111 per container.

“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,” said Ash Amirahmadi, UK managing director at Arla.

The dairy co-operative has previously said a no-deal Brexit could have “disastrous” consequences for the UK’s dairy industry and its consumers. “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,” said Mr Amirahmadi.