A London School of Economics (LSE) report, which was commissioned by the dairy processor Arla Foods, has warned that the UK will face severe dairy shortages if a Brexit deal is not secured.
Britain is a net importer of dairy produce and depends on supplies primarily from Ireland, Denmark, Holland, Germany and France for everyday items such as cheddar cheese and butter.
However, the report warns that tariffs of between 41pc and 74pc will be imposed on dairy produce if EU-UK trade reverts to WTO rules.
Reacting to the findings of the report, Ash Amirahmadi, the UK managing director of Arla Foods, warned of serious implications for both the supply and price of dairy products.
“Most likely we would see shortages of products and a sharp rise in prices, turning everyday staples like butter, yoghurts, cheese and infant formula, into occasional luxuries. Speciality cheeses, where there are currently limited options for production, may become very scarce,” Mr Amirahmadi predicted.
While a no-deal Brexit could represent an expansion opportunity for UK-based dairy processors, Mr Amirahmadi cautioned that Britain would struggle to fill the supply shortfall for at least three to four years.
The UK takes around one third of Ireland’s dairy exports, with the trade worth around €820m. Over half of Ireland’s cheese exports go to Britain, close to 30pc of butter exports – including the high-margin Kerrygold brand – and around 12pc of skim milk powder. The imposition of massive tariffs on these exports would pose a serious threat to the entire sector.
The recent announcement by Glanbia Ireland that it is to develop a mozzarella plant in Portlaoise, in addition to Dairygold’s decision to produce Jarlsberg cheese at Mogeely, Co Cork, is viewed as an effort by both processors to insulate their business, to some degree, from a ‘bad Brexit’.