UK dairy producers are being advised that the most challenging period they will face in regards to Brexit will be immediately following our drop out of Europe.

According to Kite Consulting’s Edward Lott and John Allen, speaking at the UK Dairy Day in Telford on September 11, farmers should plan ahead for this period.

John Allen said: “On November 1, without a deal, we could find ourselves with no trade tariffs imposed on food, in order for the government to avoid shortages and inflation, while UK dairy exports may have tariffs imposed on them.

"The impact of this will be felt on an industry already suffering the effects of challenges from the structure of the liquid market.”

Edward Lott said: “Apart from pressure on prices due to the export conditions, a drop in the value of the pound following a hard Brexit will also have an effect on the industry. Imported input costs may rise. With the UK near ‘full employment’ and a weak pound impacting on the amount of money European farm workers are sending home, we’re already feeling the impact of Brexit on labour.

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"A hard Brexit, with its effect on currency, will only impact on this further.

“The banks may also be less willing to offer support than in previous downturns. Due to the level of dairy farmers defaulting on capital repayments in 2015/16, dairy farming has moved from low to high risk.

“It’s worth communicating with your bank manager now, so they have no surprises. Looking to fix future prices on imported inputs and building cash reserves into a dairy farming business makes good sense.

“In fact I’d go as far as to say farmers need to have at least a year’s capital repayment costs available to them in an easy access format. This is quite a change in mindset for an industry previously told to invest in livestock, land and buildings in order to grow.”

John Allen concluded: “The UK remains a good place to produce milk. We have low cost of production, skilled operators and can grow excellent forage but making sure you have a plan for challenging times is crucial to the survival of your business.”

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