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Dairy Farmer magazine's April 2019 digital edition

Don’t miss this month’s new look Dairy Farmer. Take a look at the digital edition today.

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A word from the Editor

 

As we frantically scrabble for more time to resolve the Brexit saga, we have to remember that the ‘no deal’ default has now been brought into even sharper focus, despite Parliament having voted it out.

That is because the vote was non-binding, of course, and hangs there like the sword of Damocles in the event of the UK and EU failing to reach agreement.

At least now we know what the tariff differentials would be in the event of a no deal, and it has to be said it doesn’t look pretty. This is simply because a no deal would almost certainly jeopardise the UK’s ability to export dairy products out of the UK, as the default position at World Trade Organisation levels would be onerous indeed.

In contrast, the UK’s import tariffs are not nearly so bad. For example, Irish cheddar would have a tariff tax of just €221/tonne (£191/t), while our exports would be taxed at €1,671 (£1,447).

In a nutshell, Irish Cheddar would still come in, but UK Cheddar would rarely go out. The same would be true for butter.

This may be a satisfactory solution from the Government’s point of view, at least in the short-term, for keeping food prices down. But the net effect could easily be about one billion litres of additional milk hanging over the UK market without a home. All at the same time as UK milk volumes hit record levels.

The ramifications of this on producer prices do not bear thinking about. Almost immediately the tariffs were announced, a dire warning of ‘a severe price shock to the UK dairy industry’ was issued by industry body Dairy UK.

So what’s to do? Well the milk supply is not going to dry up any time soon, and it is looking almost certain that some milk and dairy products will find difficulty in securing a home if a no-deal Brexit turns out to be the disaster it is currently looking like.

Brexit-voting dairy farmers will not relish a delay in sorting things out, but they will like it a darn sight better than the severe price shock that is being talked about!

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