Arla calls for early UK agriculture policy update as Europe and US lead milk production recovery

The Arla cooperative is active in several European countries, including the UK, where it has around 2,500 members.

Pietrangeli told those attending the conference the farmers that own Arla and the dairy industry as a whole need to know urgently what the UK government plans are.

“That means the early publication of a new agriculture policy next year. Any delays will be detrimental to our industry due our long-term planning cycles,”​ Pietrangeli said. 

Need to plan

He noted the post-Brexit trade deal is likely to be a complex part of the negotiation, adding that the two-year status quo to avoid a cliff edge is reassuring but it’s not quite enough to plan well.

Speaking on the scenario of a no deal or a default to World Trade Organisation tariffs, Pietrangeli said, “If we had a no deal and there is no transitional agreement in place, that would have potentially much bigger implications for the dairy industry and, ultimately, UK consumers. It would likely lead to a WTO default position where dairy tariffs are high in a low margin industry.” ​

He also explained the economic impact of Arla Foods in the UK.

“One in four UK dairy farmers own Arla.  They contribute £820m ($1.08bn) to the UK economy, with Arla’s total economic footprint in the UK totalling £6bn ($7.9bn),”​ he said.

“The contribution made by our business and farmer owners across Europe to the UK economy would come under severe pressure if Brexit negotiations lead to significant restrictions on free trade and quotas.”​

Give industry time

He urged the UK Government to ensure that British agriculture has a prosperous future, and is given the time it needs.

“Give us the assurance that we can see tangible benefits from the divorce, both in the short and long term. Enable us to continue to build and invest in our UK business and grow for the benefit of our farmer owners, colleagues and business partners. And give us a voice – talk to Arla Farmers and partner with us to provide the solutions.”​

Arranging trade deals

Dr David Walker, New Zealand's ambassador to the World Trade Organisation, told the Summit that New Zealand had been agreeing free trade deals since 1983 and also worked through the WTO.

He said New Zealand hoped to make progress on a deal with the EU and in the event of the UK leaving the EU, a deal could be arranged between New Zealand and the UK.

Dr Michael Dykes, president and CEO of the International Dairy Foods Association, told the summit that in the US, 'significant uncertainty' persisted over trade arrangements, adding a proactive trade policy is essential for the US.

Europe/US lead production recovery ​

Also at the summit, delegates heard that the European and US dairy markets are leading international recovery in milk markets, as it launched the World Dairy Situation Report 2017.

Véronique Pilet, editor in chief of the IDF report and Head of Economics at French Dairy Inter-branch Organisation CNIEL, said the global dairy market remains uncertain and the volatility that is a result of supply and demand issues is here to stay.

"Dynamism in the European and US markets is leading recovery and production prospects over the next few months remain good. Butter prices are at an all-time high, however skimmed milk powder prices are still eroding,"​ Pilet said.

Pilet said recovery this year followed a year when both global production of dairy and consumption were stagnant and in some areas showed a slight decrease.

New Zealand remains the world's largest exporter of dairy with a 29% share of the market, closely followed by the EU at 28% and the US at 24%.

Overall production of milk rose by 0.9% in 2016 compared with growth rates of 2.0% and more in recent years.

 ​