US Dairy Imports: Should UK Farmers Worry?

US Dairy Imports: Should UK Farmers Worry?

The Agriculture and Horticulture Development Board (AHDB) has carried out modelling on what might happen if tariffs on American dairy products such as butter and cheese were reduced or even removed. Their economists tested scenarios ranging from a modest 25% cut in tariffs, right through to a situation where tariffs were eliminated altogether.

The headline finding is that the effect on imports appears extremely small. At present the United Kingdom brings in around 65 tonnes of cheese from the United States each year, a tiny fraction of the hundreds of thousands of tonnes we import in total. Even if tariffs were cut to zero, the model predicts American cheese imports would only rise to about 180 tonnes. Butter tells a similar story. In 2023 Britain imported a little over 46,000 tonnes of butter from all sources, the vast majority of which came from the European Union. By contrast, American butter imports stood at just 5 tonnes. AHDB’s modelling suggests that even with full tariff removal this figure would only creep up by a further 3 tonnes.

On paper then, the conclusion is fairly clear: reducing or removing tariffs on American dairy products would not result in a sudden flood of imports. Instead, most of the increase would be so modest that it would largely displace a small volume of EU imports rather than directly undermining British farmers. AHDB therefore describes the overall risk to the UK dairy sector as low.

What the Model Doesn’t Capture

Although the AHDB findings sound reassuring at first glance, there are important factors that their economic model cannot fully account for. Models are useful for sketching the broad outline of what might happen but they are by nature built on assumptions. They look at average prices, current trade flows and existing consumer habits. Real markets, however, rarely behave so neatly.

The first area of uncertainty lies in transport and shipping costs. At present, the Atlantic is a natural barrier that keeps American dairy at a disadvantage. Shipping bulk butter and cheese is expensive and that is one reason volumes are currently so small. But if global shipping becomes cheaper, more efficient or more heavily subsidised, those barriers could quickly weaken. What looks like a low risk today could grow into a much larger pressure tomorrow.

Another factor is the role of the supermarkets. The AHDB assumes a relatively stable pattern of buying but the major retailers are extremely powerful and highly responsive to cost savings. If they see an opportunity to squeeze a few pence off the price of butter or cheese by switching suppliers, they will not hesitate. This could redirect significant demand towards cheaper U.S. imports almost overnight, a risk that does not show up clearly in the model’s calculations.

There is also the longer term investment angle to consider. If tariffs are permanently lowered or abolished, U.S. processors may see Britain as a more attractive market worth targeting. Once those supply chains are in place and contracts signed, the scale of imports could build up gradually over time, well beyond the modest figures the AHDB predicts.

Price volatility is another concern. British farmers are painfully familiar with sudden swings in feed, fertiliser, and energy costs. If our costs rise at the same time that American production enjoys a period of cheap grain or government support, the relative competitiveness could shift dramatically. A model that smooths out prices into annual averages does not reflect the sharp edges of real world trading.

Finally, there is the question of product positioning. The AHDB appears to assume that American imports will remain limited to bulk, low value commodities. But if U.S. dairies choose to push into higher value branded cheese or butter, they could compete more directly with the kinds of products that carry premiums for British farmers. That possibility should not be discounted.

In short, while the AHDB is right that reduced tariffs do not immediately spell disaster for British dairy, the longer term picture is more complicated. Tariffs are only one piece of the puzzle. Supermarket power, future investment, shipping costs and global price swings could all conspire to place much greater pressure on British farmers than the model suggests.

Why British Dairy Still Has the Edge

Even with tariff reductions, Britain retains a clear and lasting advantage over the United States when it comes to dairy. The edge does not come from size or cost but from quality, nutrition and reputation. These are the strengths that no model can measure but that consumers increasingly recognise and value.

At the heart of this advantage is the way our cows are fed. British herds are largely pasture based, grazing on grass for much of the year. By contrast, the American system is dominated by large scale operations where cows are routinely fed on grain, soy, and other concentrates. This difference in diet directly shapes the quality of the milk produced. Grass fed milk is richer in omega-3 fatty acids, conjugated linoleic acid (CLA), vitamin K2, vitamin E, and beta carotene. It is this nutritional depth that gives British and Irish butter its natural golden colour and its reputation for superior taste and health benefits.

Consumer perception is another powerful factor. Around the world, grass fed dairy is regarded as a premium product. Irish butter brands, most famously Kerrygold, have proven the point in the United States by commanding shelf space and premium prices on the strength of their pasture fed credentials. Britain is well placed to tell the same story. When shoppers are faced with a choice, many will pay more for food they believe is more natural, more nutritious, and more closely connected to the countryside.

The cultural heritage of British dairy also sets us apart. Our cheeses are not simply commodities but carry centuries of history and craftsmanship. Stilton, farmhouse Cheddar, Wensleydale and countless regional varieties bring with them identity, provenance and flavour that cannot be manufactured in an American mega dairy. This combination of tradition and taste creates a value that goes beyond price per tonne.

For farmers, the message is clear. Trade deals may nibble at the edges but the real defence of our industry lies in doubling down on what makes British dairy special. Provenance, grass fed quality and superior nutrition are the shields against imported competition. If these strengths are clearly communicated to consumers, then British dairy will not only withstand international pressure but continue to command loyalty at home and abroad.