The impact of Brexit on the UK dairy sector


July 2018

The impact of Brexit on the UK dairy sector

More than two years have passed since the UK’s decision to leave the European Union, with “Brexit Day” looming ever closer. Both the UK Government and the EU have said that frictionless trade is a key priority; and the UK Government has published a White Paper on the UK’s future relationship with Europe which aims to achieve that goal, but this still has to be negotiated with the EU (and continues, of course, to be a matter of debate in the UK).

Given that changes could come into force as soon as March 2019, businesses such as Arla Foods UK have been compelled to start contingency planning, analysing what effect these changes might have on its business, on its farmer owners and above all on British consumers. To give more depth to this analysis, Arla commissioned LSE Consulting to produce a report to analyse the impact of Brexit on the UK dairy sector.

The key finding of the report is that without frictionless trade and unfettered access to key skilled workers after Brexit, there will be significant impacts on consumers as supply chain costs go up. Delays at the border, exacerbated by a shortage of vets, lorry drivers and farm workers could mean:

  • Increased veterinary checks required as the number of vets decreases leading to a growth in workload of 372% for vets at the border. There could also be rising costs associated with EU national lorry drivers and farm workers, as they become harder to recruit. Government data has already reported a 10% increase in some wages.
  • Additional delays are likely due to pressures on the UK’s Customs Declaration Service, which is designed to handle 150 million declarations per year – a number that is expected to go up to more than 250 million post-Brexit.
  • Further additional costs due to subjecting products of animal origin (POAO), such as dairy, to checks at the border. POAO face greater scrutiny when imported to the EU, and for those outside it, veterinary control costs £50 per 6 tonne consignment, with organic certification costing £45 per consignment.
  • Increased times for customs inspections at UK ports – for every extra seven minutes of port check times, transportation times will increase by 10 hours, incurring additional costs of at least £111 per container.

The backdrop to all this is that, at 16% the UK has the second largest dairy trade deficit in the world meaning it heavily relies on imports – with the overwhelming majority (98%) of UK dairy imports coming from the EU.

Given this context, the result of potential issues and delays after Brexit identified in this report, could be a lack of availability of dairy staples on supermarket shelves, with products that have limited production capacity in the UK such as speciality cheese particularly prone to shortages. There could also be an increase in the costs for these products. The only alternative is not an alternative at all: watering down the UK’s world-leading food and animal welfare standards in a rush to ramp up production quickly, a choice that no farmer and no consumer would be prepared to make. 


Impact / Media Coverage

UK media

The Guardian - "Cheese and Brexit: now they're both giving me nightmares"
18 August 2018

i News - "All the food and drink that could get more expensive after Brexit – and how much by"
2 August 2018

City A.M. - "Aldi suppliers asked to prepare in the event of a 'no deal' Brexit amid stockpiling fears"
29 July 2018

The Independent - "Brexit: What happens if UK leaves the EU with no deal?"
24 July 2018

Express - "Brexit risk leaving Brits CHEESED OFF as dairy products could become ‘luxury’ items"
19 July 2018

Somerset County Gazette - "Arla Foods warns of impossible choices post-Brexit"
19 July 2018

The Iris Times - "Brexit crisis descends to talk of stockpiles and ‘luxury’ cheeses"
19 July 2018

The Week - "Could dairy become a 'luxury' after Brexit?"
19 July 2018

Business Leader - "Britain’s biggest dairy company warns of “dairy dilemma” of impossible choices post-Brexit"
18 July 2018

Cooperative News - "Arla co-op warns Brexit could send dairy costs soaring in the UK"
18 July 2018

ShortList - "We've got some terrible, terrible news for cheese lovers - and Brexit is to blame"
18 July 2018

Sky News - "Brexit may mean dairy products become luxury items, food firm warns"
18 July 2018

The Guardian - "Dairy Products "may become luxuries after UK leaves EU""
18 July 2018

The Independent - "Butter, yoghurt and cheese could become “occasional luxuries” after Brexit, dairy industry warns"
18 July 2018

i News - "Butter, cheese, and yoghurt could be a lot more expensive after Brexit"
18 July 2018

Yahoo News - "Dairy dilemma – products like butter, yoghurt and cheese could become luxuries after Brexit"
18 July 2018

BBC Radio 4 - Farming Today
17 July 2018

Mirror - "Summer heatwave causes shortage of broccoli and salad"
17 July 2018


International media

Indiablooms - "Brexit: prospects curdle for British dairy"
27 August 2018

Business Insider France - "Un Brexit 'dur' risque de faire grimper le prix du pain, du lait et des crèmes glacées au Royaume-Uni"
14 August 2018

Basler Zeitung - "Wie der Brexit das Sandwich der Briten bedroht"
14 August 2018

Financial Times - "Dairy products could become ‘luxuries’ after Brexit, industry warns"
19 July 2018

24.hu (Hungary) - "A Brexit után luxuscikk lesz a vaj és a sajt Nagy-Britanniában"
18 July 2018

Euronews (Germany) - "Kase wird fur Briten zum Luxusprodukt nach Brexit"
18 July 2018

Press Digital (Spain) - "Los productos lácteos en el Reino Unido podrían convertirse en un lujo tras el Brexit"
18 July 2018


Industry publications (UK)

The Farming Forum - "Dairy product shortage a real risk post-Brexit…"
25 July 2018

Global Cold Chain News - "Arla warns of dairy price rises post Brexit"
20 July 2018

South West Farmer - "Arla Foods warns of impossible choices post-Brexit"
19 July 2018

Farmer's Guardian - "Arla warns of post-Brexit “dairy dilemma"
18 July 2018

Farming UK - "“Dairy dilemma”: Brexit may lead to “dairy shortage and price hikes"
18 July 2018

Kam City - "Arla warns of “Dairy Dilemma” of impossible choices post-Brexit"
18 July 2018

Smallholder - "Arla Foods warns of impossible choices post-Brexit"
18 July 2018

Dairy Reporter - "Arla foresees post-Brexit dairy problems for UK consumers"
17 July 2018

Farmers Weekly - "Brexit could make cheese an occasional luxury, co-op says"
17 July 2018

Food Manufacture - "No Brexit trade deal will harm dairy choice: report"
17 July 2018

Foodbev Media - "Arla Foods warns of higher costs for UK consumers after Brexit"
17 July 2018

Just-food - "Arla Foods issues stark warning on Brexit fallout"
17 July 2018

Talking retail - "Arla Foods issues Brexit warning"
17 July 2018

The Grocer - "Brexit import costs could lead to higher prices and less choice: Arla"
17 July 2018


Industry publications (International)

New Food Magazine - "Dairy industry faces “impossible choices” post-Brexit, says Arla"
20 July 2018

Food Ingredients 1st - "Dairy dilemma: Brexit could lead to butter, yogurt and cheese shortages, warns Arla Foods"
19 July 2018

MilkUA - "Dairy dilemma: Brexit may lead to dairy shortage and price hikes"
19 July 2018

Agriland - "Britain’s biggest dairy firm warns of “diary dilemma"
18 July 2018

Fodevarewatch (Denmark) - "Arla advarer briter om højere forbrugerpriser efter brexit"
18 July 2018

IEG Policy - "Butter, yoghurts, cheese “could be restricted “ by Brexit"
18 July 2018

Index (Hungary) - "Luxuscikké válhat a sajt Angliában a brexit után"
18 July 2018

SupplyChainBrain - "Spiralling Trade Costs Pose Dairy Dilemma After Brexit"
18 July 2018

Asian Trader - "Arla Foods warns of “dairy dilemma” post-Brexit"
17 July 2018


Conferences

LSE Consulting - Presentation of report and panel debate with industry stakeholders
17 July 2018