Dairy firm Arla Foods has said that it is fearful that the UK market for EU dairy products will be 'significantly impacted' if no Brexit trade deal is reached, as well as leading to significant price increases.
“Arla Foods has consistently advocated for as free a trade as possible once the UK leaves the EU," commented Peter Giørtz-Carlsen, EVP Europe and member of Arla Foods' executive board.
"This is the best outcome for the European food and beverage sector – including dairy. There is a risk that in a no deal scenario, the UK market for EU dairy will be significantly impacted."
Giørtz-Carlsen was commenting following the publication of a report by the London School of Economics (LSE), commissioned by Arla Foods, which concluded that without 'practical action' by both the UK government and the EU, consumers will be 'badly impacted'.
The Vulnerabilities of Supply Chains Post-Brexit report found that currently, 40% of agricultural and food products consumed by households and businesses in the UK are imported from the EU.
In the dairy sector specifically, 15% of all products sold are imported into the UK, and 99% of this currently comes from the EU.
According to the LSE report, a no-deal Brexit is likely to disproportionately affect the food and beverage sector, with average tariffs rising from 0% to 17.7% for EU exports to the UK, which is more than four times other sectors.
EU consumers will also feel the impact, with average prices for UK branded products imported into the EU increasing by 27.9% under a no deal. Unbranded UK products to the EU will increase by 13.2%.
"This report shows how integrated the UK-EU food supply chain is and the mutual benefits both sides get from this," said Giørtz-Carlsen. "Because of this free trade, UK and EU consumers have access to a large choice of high quality, affordable products.
"We want to ensure this continues after the 31st December 2020 and we know consumers expect this as well. But for this to happen, it is essential we secure a tariff-free agreement. And it is vital too that the UK Government, EU and Member States take pragmatic and sensible steps to limit the impact of non-tariff barriers."
The report urges the creation of a trade deal for food and beverages, so as to avoid the creation of tariffs and additional custom requirements, particularly for perishable goods.
“Tariffs imposed on food and drink are typically very high, so the impacts of a no-deal Brexit will inevitably have profound effects on customer choice," Dr Elitsa Garnizova, lead of the LSE's trade policy hub, and one of the report's authors, said.
"Even with risk management strategies in place, no-deal will have significant impact on the fresh foods sector and this needs to be considered by policy-makers in the coming weeks."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.