Trade in dairy products could stop completely if the UK and the EU do not manage to agree a post-Brexit deal, according to Dairy UK chairman Paul Vernon.
Mr Vernon made the remarks when he gave evidence to the Environment, Food and Rural Affairs Select Committee last week as part of its ongoing trade inquiry.
He told MPs falling back on to World Trade Organisation (WTO) rules would either ‘block’ UK exports and EU imports or lead to huge price rises for shoppers.
“If you take cheese as an example, WTO tariffs on dairy will do what they are designed to do”, Mr Vernon said.
“They will stop trade. The WTO tariff on cheese is of the order of 40 to 50 per cent, depending on the variety.
“We do not make 50 per cent margins in this sector, so the ability to absorb [the cost] is minimal, if not non-existent.
“[Tariffs] would either block trade, or they would be reflected in consumer prices.
“The reflection in consumer prices will have the knock-on consequence of reducing demand for dairy, so it is a vicious circle.”
Asked whether the UK could increase production if imports became more expensive because of tariffs, Mr Vernon was sceptical.
“If we were to become self-sufficient, we would need to produce another 3.3 billion litres of milk, which is an extra 20 per cent”, he said.
“If you look at dairy in isolation, we could grow dairy output, but if we end up with a WTO situation, it will not just affect dairy, it will affect the whole agri-food sector.
“You will have a scenario where you have a number of different sectors looking to grow and competing for the available resources.
“Obviously there has to be growth and investment at farm level, there has to be growth and investment at processor level and there has to be a market for it.”
Mr Vernon also raised concerns about the industry’s ability to increase production without overseas workers.
“The question we have to ask ourselves, and we do not have the answer to, is who is going to work in these factories, who is going to work on these farms?” he said.
“Where is the available labour to drive that production growth?”