UK’s dairy trade deficit stands at £1bn

Published 6 July 16

The UK spent over £2bn on imported dairy goods in 2015, while generating just over £1bn in revenue from dairy exports. As a result, the country has a negative trade balance of around £1bn for dairy.

However, if we look at the same balance in volume terms, imports and exports were almost level in 2015. Imports totalled 1.2m tonnes and exports were 1.1m tonnes, giving a small negative balance of just over 100k tonnes.

The difference between volume and value balances is driven by the range of products exported versus imported and their relative average prices. About 60% of UK exports, in volume terms, are milk or cream in liquid form, which have a lower value per tonne because of their higher water content. Meanwhile, the majority of the UK’s spend on imports is on higher value products such as cheese, butter and yoghurts.

The good news is that the trade balance has been improving since 2013. However, it appears to be largely responding to increased product availability due to increased milk production. Given that milk production could fall in 2016, it could potentially turn more negative again this year.

UK trade balance 2015