Border friction will drive up cost of butter and cheese

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The availability of butter, yoghurts and cheese could become restricted after the UK leaves the European Union, according to dairy giant Arla Foods which has commissioned a study by the London School of Economics to look at the impact.

The UK is heavily dependent on dairy imports and the study found that any friction and any limitations on access to key skills will mean that UK consumers have less choice, higher prices, and potentially lower food standards.

Arla’s UK manging director Ash Amirahmadi said: “Our dependence on imported dairy products means that disruption to the supply chain will have a big impact. Most likely we would see shortages of products and a sharp rise in prices, turning every day 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.”

Arla is a global cooperative with 11,000 members, some 2,400 of whom are British. It reckons the issues identified in the LSE report mean a dairy dilemma in the UK, with three possible outcomes:

  1. 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.
  2. 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.
  3. 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 impacts throughout the supply chain, problems that could be exacerbated by a shortage of vets, lorry drivers and farm workers post-Brexit.

Among 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 delays and 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 million expected 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 cent for 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.

Amirahmadi said: “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.”

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