Blog: Brexit could be worse for dairy than Russia ban, EU and UK producers warn

Dean Best | 26 June 2018

Russia's embargo on a swathe of foodstuffs from the EU in 2014 - a ban that lasts to this day - hammered the bloc's dairy industry. But producers on both sides of the English Channel have warned the impact of Brexit could be worse.

Europe's dairy sector saw one of its main markets close overnight, hitting jobs and creating a glut of dairy products on the market, a key factor in a tumble in global dairy prices.

Moscow's move - issued in response to the West's sanctions over Crimea - has triggered what leaders in Europe's dairy sector still describe as a "crisis" in the sector.

However, yesterday, the dairy industries of the UK and the wider EU joined forces to set out why they believe Brexit could have a more negative impact.

And, similar to other parts of the broader food sector, Dairy UK and The European Dairy Association called for the relationship between the UK and the EU after Brexit to remain "as close as possible to the status quo".

Before the 2014 embargo, Russia was the largest importer of EU cheese. A third of all cheese and butter exports from the EU went east to Russia.

"To put this into context, the 2014 Russian ban on imports of dairy products triggered a crisis in the European dairy sector. Significant changes were needed in the very short term for exports of large volumes of milk and dairy products. New markets had to be found and unlocked very rapidly. The results of sudden changes in milk price and urgent intervention by the EU Commission are adversely affecting European and global dairy markets to this day," the EDA said yesterday.

However, the EDA noted how, for example, how EU shipments of certain dairy products to the UK dwarf those made to Russia before the embargo. It also pointed out similar dynamics for UK exports to the EU versus Russia.

If the UK and the EU do not reach a deal on trade terms, the markets will revert to WTO norms. "If UK-EU27 trade continues at the level of 2016, it is estimated that UK importers would need to pay more than EUR1.7bn in duties to import EU dairy products. Likewise, the EU27 importers would need to pay over EUR660m in tariffs to continue importing from the UK," the EDA said.

"It is our main priority that the relationship between the EU and the UK remains as close as possible to the status quo after Brexit and throughout a transition period," the associations said.

"The UK should preferably remain part of, or at least as close as possible to, the EU single market and the customs union.

"This would secure the free movement of milk and dairy products between the EU and UK with no tariffs or quotas from either side for milk and dairy products, and limit non-tariff barriers to trade as much as possible. The EU and UK should have no (significant) divergence in the regulatory sphere when it comes to policies affecting dairy and dairy products and a level playing field should be sustained."