Brexit and the UK Dairy Sector
The UK has the second largest dairy trade deficit in the world meaning it heavily relies on imports. The overwhelming majority (98%) of UK dairy imports used to come from the EU. Even though the UK’s departure from the EU only came into effect at the end of January 2020, the referendum results in 2016 already created a great deal of uncertainty for major dairy sector players, such as Arla Foods UK (Arla). Arla is the largest supplier of fresh milk and cream in the UK, producing over 2.2 billion litres of milk annually. Anticipating the disruptions that Brexit would cause to the entire sector, Arla was compelled to start contingency planning, analysing what effect these changes might have on its business, its farmer-owners and, above all, on British consumers.
The Insights of the Analysis
Arla commissioned LSE Consulting to do research into the implications of Brexit for the dairy sector in order to prepare the organisation for the challenges that lay ahead. Dr Jan Bakker (Centre for Economic Performance, LSE), an expert in international trade, urban economics, and regional development, was invited to undertake this consulting project.
The impact of Brexit on the UK dairy sector has been evaluated along three central dimensions: trade costs, labour markets, and the goods market. The key finding of the report is that without frictionless trade and unfettered access to key skilled workers after Brexit, there will be significant impacts on consumers as costs rise throughout the supply chain.
As a result of this analysis, Arla was able to consolidate the research insights and feed these into the business strategy for the post-Brexit world. This analysis generated a vibrant public debate about the impact of Brexit on the food industry and was referenced globally in more than 90 different media articles.
Tailored Expertise
LSE Consulting was approached by Arla to seek expert advice within LSE to undertake the research around the potential implications of Brexit. Working closely with Arla and the academic expert, LSE Consulting helped to shape the project scope in order to align Arla’s requirements with the approach and output, and to ultimately secure the project. LSE Consulting supported the bid preparation and advised on the budget, negotiated the IP rights on behalf of the academic expert - including the rights to publish the research, and ensured successful project management.
As a result of this project, Arla returned to LSE Consulting to seek expert advice within LSE and to commission a new project on the vulnerabilities of supply chains in the United Kingdom and the European Union after Brexit.
If you are interested in exploring how LSE Consulting can support you in using your expertise to address real-world issues, please get in touch with us via consulting@lse.ac.uk.