Butter: Modelling the impact of the UK-Switzerland FTA

The impact of the UK-Switzerland FTA was examined for butter, looking at the changes expected after the deal comes into force. This aspect of the modelling work assumes all other factors, except the FTA, remain the same.

Key points

• The model suggests that Switzerland butter exports to the UK will not change 

• The model suggests that UK butter exports to Switzerland will increase by about 6t  

• The model predicts that changes to production and price will be relatively small (less than 1%) 

Summary of findings

The chosen network for butter consists of the UK, EU, USA, New Zealand/Australia, and Switzerland. The EU and New Zealand/Australia are the two largest exports of butter in the network, exporting about quarter of a million tonnes of butter on average each year. Switzerland imports and exports very small amount of butter as domestic production satisfies consumption demands.  

The model predicts an increase of about 6 t in UK butter exports to Switzerland in the first year of a fully liberalised trade scenario. To put this into context, the UK currently exports about 37k t of butter per year globally. The model predicts a slight reduction in the amount of UK butter sold into the UK market and in the EU. The model predicts the Swiss butter imports into the UK will increase by 19%, a rise of about 1 t annually. There will also be a slight reduction in imports from the EU.  

There isn’t a great deal of change in the domestic marketplace. UK domestic production will rise by about 5t, an increase of less than 1%. Table 1 details the impact on domestic production, prices, and the total amount of cheese available in both countries.  

Table 1. Modelled changes in the UK and Switzerland of domestic production, prices and total amount of butter sold

Limitations of modelling results 

There are a number of caveats to these results.  

The analysis is based on full liberalisation. Switzerland is a highly protectionist country with high tariffs on goods especially meat and dairy. There are currently tariffs on cheese exports to Switzerland and negotiations may focus on reducing these not eliminating completely.  

There are a number of caveats to these results. Like other economic models, the trade network model is not a prediction or forecast and assumes all factors other than FTA remain equal. This is unrealistic in a global economy but is an essential assumption for modelling due to the complexity of predicting future changes. What the network model can do, though, is examine specific ‘what if’ scenarios and this is something that AHDB will be analysing going forward.  

The model does not take into account Sanitary and Phytosanitary (SPS) limitations such as Export Health Certificates (EHCs) and other trade barriers. Read more about trade implications of Non-Tariff Measures (NTMs). 

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Economic modelling of the beef, sheep, dairy and pork sectors