Realist, not conformist analysis of the latest financial, business and political news

Today’s Absurd Brexit Scare – Dairy Will Become More Expensive

The list of things that might be caused by Brexit – from sexual incontinence to sexual impotence to believe some people – continues to grow but this specific idea that it will lead to rising dairy prices does seem more than a little absurd. For some decades now European Union policy has been to artificially restrict the production of milk in these isles so as to offer export opportunities for farmers in other areas of the bloc. The idea of leaving such a system making milk and derived products more expensive is more than a little odd:

European dairy cooperative Arla Foods says Brexit could leave UK consumers with less choice and higher prices, turning everyday staples, like butter, yogurts, cheese and infant formula, into occasional luxuries, and making speciality cheeses ‘very scarce.’

Hmm, well, that might be large exporter to us worrying about being able to make fewer exports rather than anything else.

European dairy heavyweight Arla Foods has painted a bleak picture of the situation that could face UK consumers post-Brexit.
The cooperative says border breakdown could leave UK consumers with less choice and higher prices when it comes to dairy produce.

That’s going to be the result of lifting restrictions upon domestic production? But then we get to the details of their report:

If the UK crashes out of the EU with no deal and defaults to World Trading Organisation rules, prices will almost certainly rise as dairy products, along with meat, attract high tariffs.

Food prices would soar after no-deal Brexit, warns major dairy boss

A milk product with a fat content of 3% to 6% has a tariff of 74%, while fresh mozzarella is rated at 41% and unripened cheese at 68%.

Even if a deal were struck and there were no tariffs,

This is to substantially misunderstand what WTO terms mean. They are not tariffs which must be applied to imports into the UK. They are maximum tariffs which may be applied. We can have any tariff level we like up to those maximums, the only restriction being that what we charge to goods from one place must be the rate we charge to goods from all places. As I’ve explained before:

We have all long known that the CAP makes food more expensive in Europe. Being outside the CAP will therefore make food cheaper. And no one is going to insist that we do something as blitheringly idiotic as raise import tariffs to prevent this from happening, most certainly not the WTO, whatever Nick Clegg might think.

The basis of the report is drivel. As with so much about the costs of Brexit our only real question remaining is why are the bastard bastards bastard lying to us?

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Neil McEvoy
Neil McEvoy
2 years ago

“The basis of the report is drivel”
Full-fat drivel at that.

Arthur the Cat
Arthur the Cat
2 years ago

The Grauniad article says it was research done by LSE. I’d always thought the E stood for economics, but was obviously wrong.

David Moore
David Moore
2 years ago

Funny, I just sent this too you. I’m still tempted to email Mr Arla and remind him that milk products can be shipped from here in NZ for competitive prices without delay, so no need for him to carry the stress of providing all the stuff himself.

john77
john77
2 years ago

Lurpak, Arla’s no 1 product is *already* much more expensive than English butter, so there is zilch chance of it getting any more expensive and still selling in any significant volume. Ireland doesn’t have a realistic alternative to the UK as an export market so Irish butter will stay much the same price as British and Varadkar will be stuffed if the EU talks May into imposing import suties on Irish butter when it crosses to the mainland. Joining the EEC was a major cause of inflation as it increased food prices towards continental levels with a knock-on effect on… Read more »

David Moore
David Moore
2 years ago

Just to add too, the level of lying is staggering, even Trump would blush, so why are they so afraid they feel the need to do that?

Spike
2 years ago

So liberty would impoverish us — drive wages down and prices up — faster than EU racketeering is already doing in order to guarantee profits for Eurodairies and divert product to Southern Europe. To believe this, as usual, we must assume that countries and individuals with the new freedom would elect to use it in the most damaging ways. The CAP is a negative-sum game, not just considering the cost to administer, learn about, and prove compliance with, but in all the effort diverted from productivity to lobbying for advantageous changes in its terms. Why are the bastards lying to… Read more »

jgh
jgh
2 years ago

Current tarrif is 68%. WTO would force us to reduce that to 5% or less. And somehow, 5% is more expensive than 68%.

And, of course, the Grun has comments turned off so they can hide from their own inumeracy.

Arthur the Cat
Arthur the Cat
2 years ago

My other half came up with these stats:

https://dairy.ahdb.org.uk/market-information/processing-trade/imports-exports/uk-dairy-trade-balance/#.W1A-g5DTW9c

We’re self sufficient in milk and cream. We import a lot of cheese but to describe it as time critical is to utterly miss the point of cheese.

David Moore
David Moore
2 years ago

Just to add too, the level of lying is staggering, even Trump would blush, so why are they so afraid they feel the need to do that?

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