Dairy industry responds to Brexit speech

19-Jan-2017 - Last updated on 19-Jan-2017 at 12:22 GMT

As the UK prepares to leave the EU, there are concerns over how a hard Brexit and leaving the Single Market will affect agriculture and the dairy industry. Pic: ©iStock/PicturePartners/Physicx/NirdalArt

This week, British Prime Minister Theresa May outlined some of the expectations of Brexit negotiations, expected to begin after the UK formally announces its intention to leave the EU this spring.

In her speech Tuesday, leaving the single market was introduced as part of a ‘hard Brexit’ strategy.

The speech has been met with caution and some concerns.

Dr Judith Bryans, chief executive of Dairy UK, said that while Dairy UK welcomes the Government’s commitment to maintain a robust trading relationship with the EU, “we have significant concerns about the UK's prospects outside the Single Market and without certain elements of the EU Customs Union.”

The NFU said that as the Prime Minister ruled out the UK’s continuing participation in the European Single Market or the EU Customs Union, “We hope the Prime Minister’s ambition can be achieved, but as we know these kind of deals normally take years to conclude and do not cover all products.”

It added it was now seeking urgent talks with the government as to how a post-Brexit Britain could work for Britain’s food production and for detailed commitments on a suitable transition period.

And dairy cooperative Arla Foods, which has members throughout Europe, including the UK, told DairyReporter in a statement that although the company is optimistic about the future of the industry, severe damage could be done if the deal negotiated does not have food producers and farmers at its heart.

Dairy UK

Bryans said that with 80% of UK dairy exports currently going to EU countries, any disruption to current agreements would have an extensive and costly impact on the industry.

She added that Dairy UK supports the Government’s commitment to put in place a strong, swift and effective transitional process, and urged avoiding any kind of interruption to current trade agreements with EU countries or the creation of counterproductive tariff or non-tariff barriers.

“What we absolutely cannot see is a fall back to WTO default terms as the tariffs within WTO arrangements would have disastrous consequences for dairy trade.

“In addition to uninterrupted access to the EU market, our priority for the UK dairy industry is to avoid the creation of non-tariff barriers and to retain access to productive labor.”

NFU

The NFU Council also touched on the EU market and the workforce in its response.

It said British food production needs the best possible access to trade with Europe and access to a competent and reliable workforce in a post-Brexit UK.

The NFU also wants a commitment that agriculture is a key industry for the UK, and that a post-Brexit Britain will allow farmers to be profitable, productive and realize the potential of British food production.

It also said any changes to trading relationships or the agricultural policy affecting farmers should be subject to a period of transition to allow farming businesses to adapt to any new environment.

The NFU noted that 72% of agricultural exports go to the EU with some sectors being heavily dependent on trade with the rest of Europe.

Arla Foods

Arla Foods told DairyReporter that Britain’s decision to leave the European Union is both exciting and daunting not just for the UK dairy industry but internationally.

“With so much speculation about what the impact of Brexit might be, it is important now, more than ever, that the food and farming industries work together to achieve the best outcomes for both,” its statement said.

“For every new opportunity that opens up for new dairy export markets, there is a concern about UK access to markets closer to home; for every call to revamp the Common Agricultural Policy (CAP), there are concerns about what will happen to the levels of support that farmers receive.”

Arla Foods said that it will continue to work on engaging with the governments in all EU markets within which the company operates to provide a fact base that helps them to fully understand the impact on the dairy industry, Arla’s business and its farmer owners of the scenarios that are being discussed.

“While the majority of Arla’s UK business is based on local production, it is critical that our products can move freely across the markets in which we operate, enabling us to utilize Arla’s European milk pool of 13bn kilos of milk to the benefit of our farmer owners in all markets,” the company said.

Importance of single market

Operating in an unrestricted single market is important to the company, it said, adding that it benefits from free trade and a pooled market.

Reiterating Dairy UK’s comments on WTO, Arla said, “We would wish to see this access continue and are concerned about the implications of exiting the single market given the uncertainties this would likely bring. Importantly, we believe that any situation resulting in a default to WTO position would be counter-productive for the dairy industry.”

In conclusion, Arla said that it supports the UK Government’s commitment to an efficient and effective transitional process but urged against any kind of interruption to current trade agreements with EU countries or the creation of any tariffs.

“We believe a well-functioning and strong EU which focuses on a future relationship with the UK that ensures the best possible conditions for continued free movement of goods, services, people and finances is important to our success.”