The opportunity for home grown dairy

Published 26 May 17

While the UK’s future trading arrangements remain uncertain, UK retailers and foodservice providers will be looking at the supply of their key dairy products. Could this be an opportunity for them to replace some imported goods with domestic produce?

If the UK were to secure a free trade agreement with the EU, dairy trade patterns are unlikely to change. This could be seen as beneficial by some in the European dairy industry, given that the UK is its largest customer, importing around £2.5bn worth of dairy produce from the EU-27 during 2015. The UK market is worth twice as much to the EU-27 as the share of the Russian market it lost following the 2014 import ban.

Individually though, Ireland leads the list of member states that rely heavily on the UK as a dairy customer, exporting nearly a third of its dairy produce to the UK. The alternative to a free-trade agreement could see tariffs and other trade barriers adding up to 50-60% on the price of traded products.

The uncertainty surrounding our future trade position, and the risk of imported goods being more expensive, will be influencing decisions over the next two years. Retailers and foodservice providers will be looking to secure supply while limiting the effect on consumer prices.

That uncertainty offers an opportunity for the UK dairy industry to replace some imported goods with its own domestic produce – but only if it is able to offer home-grown alternatives and can compete with other nations who will be vying for the same business.

Over the summer, AHDB will be focusing on individual product ranges to assess the level of home grown opportunity that exists. We will also look at how the UK industry might be able to take advantage of those opportunities.