UK Cheese Producers Face Mounting Losses Amidst Stalled Canada Free Trade Agreement Negotiations

After the Brexit transition period, Canada extended the allocated export volumes the UK had enjoyed as part of the EU until the end of this year. However, with no permanent solution in sight, key exporters, Canadian retailers, the Provision Trade Federation (PTF), and Dairy UK are urging for a two-year extension to the 'cheese letters' expiring at the end of this year. This extension would allow UK cheese producers to continue exporting, maintaining order continuity into 2025.

The PTF has written to the UK Secretary of State for International Trade and her Canadian counterpart, advocating for this extension. Despite these efforts, Canada's chief negotiator has rejected the option, leaving UK cheese exporters at risk of defaulting to the non-EU reserve of Canada's quotas from January 1, 2024.

Already, UK cheese exporters are experiencing losses on post-Christmas orders, as they can't guarantee the volumes they previously could. The potential shift to Canada's non-EU quota reserve would make UK producers smaller players in a competitive market, leading to further challenges.

Some well-respected branded producers face the threat of losing millions of pounds in sales, impacting both existing and potential future sales. The UK cheese export industry has shown significant growth, with a 15% year-on-year increase in volume and a 39% increase in value in 2022, reaching almost 180 million tonnes and £785 million, respectively.

The industry is pressing the government for the best outcome, considering the potential impact on the future potential of the UK cheese export market. While the prognosis currently appears challenging, industry stakeholders remain hopeful that negotiators can find a solution to address the concerns of UK cheese producers in the Canada FTA negotiations.