One of the main Brexit concerns in dairy, as in beef, is the spectre of a cheap food policy. Fears have been growing over the potential ramifications if, for political reasons, the government unilaterally lowers tariffs on dairy imports to the UK.
Chairman of the NFU’s dairy board, Michael Oakes, is concerned that if European producers are better supported under the Common Agricultural Policy than their soon-to-be-exempt British counterparts, it could give them a competitive advantage on the UK market if there are no barriers.
“If the government, of whatever colour, decides to pursue a cheap food policy, it would be very short-termist in our view, and very damaging to most agricultural sectors, including dairy,” Oakes says. The UK already operates one of the largest trade deficits in the world for dairy products, and the big opportunity going forward will be to displace some of those imports, he adds.
Dairy farmers have been continually squeezed by British retailers, with Asda, Morrisons, Aldi and Lidl all targeted by farmers’ protests back in 2015 following further cuts to the price of milk. Oakes is clear that if retailers and consumers want British product, they need to develop better working relationships with the supply chain. And he is hopeful that Brexit will focus supermarkets’ minds in this regard.
Last week the government announced a range of measures including compulsory milk contracts and a £10m collaboration fund to help farmers and small producers compete alongside larger businesses. In addition, Oakes insists positive changes are already being made by several major suppliers, with Müller, Dairy Crest and Arla, which produces around 30 per cent of the milk sold in the UK, all beginning to move towards a more collaborative relationship with their producers.
When it comes to exports there are also opportunities thrown up by Brexit, and while European markets such as Ireland, the Netherlands, France and Belgium could be made less attractive in the result of high export tariffs, Oakes stresses that the main growth areas are in Asia, not Europe. “China is going to be a driver of global demand for quite a considerable period of time, and there are also African countries that are starting to get more affluent and want more dairy in their diet,” he says. “There’s a need for us to build our relationships and trade agreements with those countries.”
One non-EU market where there is concern is the US. Producers of high-value British cheese have enjoyed sales rises in the States over the past few years, but they are concerned that they may have to pull out of the market if the UK falls back on WTO rules.
When it comes to labour, there are also real concerns, with producers losing workers due to the devaluation of the pound. “Workers have gone to work in countries where currency works in their favour,” Oakes says, “and that’s left a hole that many farmers are struggling to fill.” Fortunately, the shortages have not reached the same scale seen in the horticulture sector, however, with the shortfall estimated at 2,000-3,000 workers and affecting long-term rather than seasonal labour.
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