The Limited Impact of US Dairy on British Markets

Fears regarding the potential inundation of British shelves by American cheese and butter have been largely dismissed by a recent analysis conducted by the Agriculture and Horticulture Development Board (AHDB). The study suggests that even with complete elimination of tariffs, the impact on domestic UK farmers would be negligible.

The AHDB's analysis considered three scenarios for US dairy imports with tariff reductions of 25%, 50%, and 100%. In all scenarios, the effect on the UK market was minimal, as any increase in US dairy imports would correspond with a reduction in EU imports.

Currently, the US exports a mere 65 tonnes of cheese to the UK annually, valued at approximately £360,000, predominantly in low-value categories. Even in a scenario of full liberalization, the volume is projected to rise by only 121 tonnes, a number that remains insignificant compared to overall UK demand.

Similarly, butter imports are expected to grow marginally from 5 tonnes, valued at £10,000, by only 3 tonnes, should tariffs be removed. This suggests that prices and domestic supply in the UK are unlikely to be affected significantly.

The AHDB underscores the minor role of the UK market within the broader scope of US dairy exports. American exporters predominantly serve markets such as Mexico, South Korea, Japan, Australia, and Canada for cheese, and Canada, South Korea, Mexico, Panama, and the Philippines for butter.

Despite ongoing expansions in the US dairy industry—including increased herd size, milk production, and new cheese-making facilities—AHDB’s modelling was based on a three-year average, not capturing more recent changes.

While price comparisons between US and UK/EU dairy products may eventually make US products more competitive, AHDB concludes that tariff reductions alone are unlikely to shift the status quo: US dairy will continue to play a minor role in Britain, with negligible influence on local prices.