Wednesday, 11 March 2020
By Kat Jack
In 2019 the UK recorded its first ever trade surplus for dairy products, although, in value terms was still trading at a deficit. That value deficit was a significant (13%) improvement from 2018, and the lowest deficit since 2007, but it still amounted to £1.1bn. The difference between the UK's performance in value compared with volume terms is due to the combination of dairy products that are traded. Here we look at some of the key factors.
The Northern Irish milk surplus
Every day millions of litres of raw milk cross the Irish border to be processed, and this has to be recorded in the trade statistics. In 2019 132k tonnes of whole milk (1-6% fat) arrived in the UK from the Republic of Ireland while 786k tonnes went the other way, amounting to a 655k tonne export surplus. This cross border trade accounts for 98% of the UK’s whole milk exports and 79% of its imports.
However, bulk raw milk is not a high value dairy product. The average value of all whole milk exported from the UK in 2019 was £300/tonne (about 29ppl). This compares to the average export value of £3,403/tonne for cheese and £2,454/tonne for bulk cream. Although whole milk shipments accounted for 55% of the tonnage of all UK dairy exports, it only contributed 14% to the overall value of exports last year.
While raw milk makes up the bulk of UK exports, our imports are dominated by higher value products, namely cheese, butter and yogurt. In 2019, cheese accounted for 39% of UK import volumes, but 60% of the total import value. Butter imports made up only 6% of total import volumes but 10% of the value.
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