UK dairy trade deficit worsens

Published 29 August 18

The UK runs at a trade deficit for many key dairy products, meaning we import more than we export. This suggests there is an opportunity for import displacement, but has that trade balanced changed since our look at this two years ago?

If we compare trade in the first half of 2018 with the same period in 2016, the results are mixed. The trade deficit has worsened for products such as butter and cheddar, but there have been improvements for processed cheese and fresh cheese (excluding mozzarella).

UK trade balance table

Current trade data only accounts for half of the year, which for some products influences the results. For example, in 2016, the trade deficit for cheddar increased significantly in the second half of the year following a drop in UK milk production. Despite pressure as a result of higher feed costs, the drop off in production in 2018 has, so far, not been as great.

UK trade balance graph

With continued uncertainty surrounding how the UK will leave the EU come March 2019, and the drive for domestically produced product to de-risk the potential for future trade barriers, one might have expected to see import volumes come under pressure. So far, this isn’t the case for key products like butter and cheddar, so we will be exploring their trade situations further in coming weeks.