Dairy industry ‘dismayed’ at updated temporary tariff regime
UK dairy processors have ‘hit out’ in response to changes to the no deal tariff regime announced by the UK government, which could cost the industry £1.3bn (€1.48bn) in lost export potential.
Dairy UK has responded to the temporary tariff schedule that was set before Parliament, saying it does not do enough to recognise the real and imminent danger of a no deal Brexit to the British dairy sector.
Currently, a large majority of the UK’s dairy exports go to the EU market but in the event of a no deal Brexit scenario the EU would impose their WTO tariffs on these products. These tariffs are very high and would make British dairy products unable to compete on the EU market.
In real terms, this would result in 150,000 tonnes of cheese and 33,000 tonnes of butter unable to enter the EU market as it does currently, flooding the UK market and creating the potential for huge farm gate price collapses. Across all products, the industry would see nearly £1.3bn in lost export potential to its most profitable market.
Although the government has committed to placing tariffs on selected in-bound dairy products, these tariffs will not be applied to all dairy foods and are too low to offer British processors a level playing field. As a result dairy businesses will lose their EU markets, while products from the EU will continue to come into the country, subject to little or no tariffs. In addition, countries outside the EU would also have access the UK market, with a potentially much lower standard of product.
Dairy UK said that if a deal is not possible then the government must put reciprocal tariffs in place to protect the industry to give this industry a chance to survive. Without this, the government will have to provide financial support to farmers to protect them from potential price collapses short term, and think about what measures businesses might need to help them in facing an uncertain trading future. With the EU accounting for over 90% of dairy exports in 2018 by volume, the absence of reciprocal tariffs allowing British dairy companies to substitute their products for EU imports will see the British dairy market crash.
Chief executive of Dairy UK Dr Judith Bryans said: “As 31 October gets closer and closer we need this government to make a deal. This is not about the politics of remaining or leaving, it’s about the uncertainty, instability and disaster a no deal Brexit would lay at the doors of an industry which helps feed this country and contributes to its economy.
“We have repeatedly voiced our concerns over a no deal scenario to the government as well as our concerns about this liberal tariff regimen, which does not go anywhere near far enough to ensure the survival of the industry. It’s time for the government to start listening. We need fast and effective action now to protect the dairy industry and in particular British cheese, otherwise we’ll see some of our world class dairy products, businesses, and farmers fail.
“Our preference is a deal. One which allows us to have open frictionless trade with our largest export customer, the EU. If that doesn’t happen the government needs to impose reciprocal tariffs to level the playing field and put in place a package of mitigation measures, before businesses are pushed to the wall,” concluded Bryans.