The dairy industry has warned that butter, cheese and yoghurt may become “occasional luxuries.”
Additional port check times will drive up the cost of each container by a significant amount.
The Luxury of Dairy
The dairy industry has warned that unless there is a favorable Brexit settlement for the United Kingdom, butter, cheese, yoghurt, and even baby formula will likely become “occasional luxuries.” The reason is that for every seven extra minutes of time spent doing port checks, each moving container will cost at least £111 more.
A London School of Economics Consulting report showed that the costs associated with trading dairy products with the E.U. will be notably greater than had been previously forecasted. In fact, LSE Consulting now predicts that the previous estimates of 2 to 2.5 percent were significantly underestimated.
Co-operative farmers group, Arla, from Europe, commissioned the research. It stated that the findings show British consumers will face notable struggles with certain dairy products. These could include much higher prices, lower standards, or shortages, following Brexit.
The Cost of Seven Minutes
LSE found that every shipping container of dairy products will cost £111 more than it currently does for every seven minutes beyond the current average time. That number will only rise along with increases in fuel costs, vehicle maintenance and the reduced shelf life available for the products within the containers, said the study data.
The report also revealed that as the UK customs system will be facing notably higher demands, it may struggle with the spike in demand, leading to further delays and associated costs. Currently, the Customs Declaration System can manage up to 150 million annual declarations. That said, it will be required to process about 250 million annual declarations post-Brexit.
The Cost of Uncertainty
The Customs Declaration System’s need to process 100 million more declarations per year than it is designed to handle will increase uncertainty and, therefore, cost. Moreover, it may stop some suppliers from being willing to send just-in-time deliveries. This would require them to establish a larger number of storage facilities and, of course, that will drive up the costs. Figures associated with the building and maintenance of those storage facilities remain “unknown but likely substantial,” said the LSE Consulting report.
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