Arla Foods Forecast
Significant rise in dairy prices in the event of a hard Brexit
Milk, cheese and cream prices will rise sharply if no trade agreement is concluded between the European Union and the United Kingdom. Dairy manufacturer Arla Foods warns against this on Monday, March 31.
The trade agreement must ensure that the prices of imports and exports are not based on the tariffs of the World Trade Organization (WTO). 'With those rates, it is no longer possible to trade freely', said Tomas Pietrangeli, managing director of Arla UK.
Free movement of goods at stake
Tomas Pietrangeli: 'We believe that the greatest danger is the restriction in the free movement of goods. That has consequences not only for us, as a company, but for the entire dairy industry.'
A hard Brexit, without a trade agreement, will therefore cause many more problems for everyone. That's the biggest warning from Arla. 'If we start trading with WTO rates around 36 pence (0,42 euros), we can close the market. If you look at dairy imports and exports, there is a deficit of 25 pence (0,29 euros)', says Pietrangeli.
Brits not self-sufficient by far
The UK will not be able to support itself in dairy. "In the UK they have neither the resources nor the capacity to meet the population's demand for dairy products," said Arla UK managing director.
According to the dairy manufacturer, this could lead to talk about terms such as food inflation. However, this could also cause problems with the supply and quality of dairy products.
2,2
billion sek
Arla benefits from United Kingdom
Dairy manufacturer Arla produces more than 2 billion liters of milk per year in the United Kingdom. In addition, the agricultural entrepreneurs, members of Arla, have invested more than £500 million in the English dairy production and supply chain.
Tomas Pietrangeli: 'The majority of our products on our English websites are made from English milk.' Exports from the United Kingdom have even increased by double digits in the past two years. Arla currently ships products from England to 69 countries. An example of this is UHT milk that is exported to China. A lot of products also go to the United Kingdom, such as Lurpak butter from Denmark.
Unfair competition
Pietrangeli also indicates that the loss of EU subsidies could pose a major threat to British dairy farming. 'Our agricultural members, from the United Kingdom, therefore have to compete not only on the world market, but also on the European market. In addition, entrepreneurs on the European market can make use of the EU subsidies.'
Access to European labor market
Arla also mentions access to the European labor market as a final risk factor. “Arla only has a small percentage of non-UK employees. British farmers are also dependent on non-British workers', says Pietrangeli. Restricting access to the European labor market could have major consequences for UK farms.
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Kimberly Baker
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