Try not to laugh but the Independent have run a headline today claiming that cheese and butter will be luxury items after Brexit because (they claim) dairy products will be more expensive to import from the EU.
We’re something like the 10th largest producer of dairy products in the world but because we export such a lot we have the second largest dairy trade deficit in the world. As a consequence, the UK is one of the world’s most valuable dairy markets and around 20% of EU dairy exports go to the UK. Where the UK buys its milk and cheese makes or breaks a country’s dairy industry and the EU as usual stands to lose most by punitive restrictions on trade with the UK. The overnight withdrawal of the average 36% tariffs on dairy imports from outside the EU will certainly see buyers looking outside the EU for their butter and cheese on independence day and there is no shortage of countries on our doorstep producing dairy at relatively low cost who will no longer be priced out of the market by EU tariffs.
Dairy production in the UK has decreased over the last couple of decades because it is unprofitable on anything but an industrial scale thanks to supermarkets paying below cost price for their milk. If the cost of importing dairy products from the EU does go up (and it’s a big if) then that will make imports less economically viable for large retailers and domestically produced products more profitable for them. They will buy more UK produced dairy which will grow the domestic industry and drive up exports as we have already seen with the manufacturing sector following the drop in the value of the pound.
It was the threat of importing cheap Polish milk that helped Tesco break the dairy farmers when they played hardball over wholesale milk prices a few years ago. If Polish milk becomes more expensive to import then that leverage disappears and UK dairy farmers could end up turning a profit on their dairy produce. The supermarkets of course tell us that paying a fair price for milk will drive up prices for consumers but it is in reality an investment in the dairy industry that will allow producers to benefit from economy of scale and reduce costs.
Leaving the EU isn’t going to result in a shortage of cheese and butter, nor is it likely to make it more expensive to the consumer. This is just more ridiculous Remainer scaremongering.
