British cheese exporters are warning of damaging losses if the British government fails to reach an agreement with Canada that secures access to Canadian markets.

Canada is currently allowing British cheese imports under a temporary “rollover” arrangement agreed when post-Brexit trade rules came into force in January 2021, but which expires on December 31 this year.

The two sides are in negotiations to agree a permanent replacement trade agreement between the UK and Canada, which experts say has included disputes over whether the UK will accept hormone-treated beef from the country.

British cheese exporters have warned that failure to agree a permanent new deal – or to extend so-called “cheese letters” that provide temporary arrangements for cheese – will result in tariff-free export quotas for British cheese exporters to Canada being cut.

In a letter to Trade Minister Kemi Badenoch, major cheese exporter Coombe Castle International called on the government to sign a further two-year extension to protect its business with Canada, which receives a third of the company’s exports.

“Every additional day it takes the government to negotiate an extension or permanent outcome is a day for which we cannot plan and therefore risk losing contracts with our Canadian partners,” wrote Darren Larvin, Coombe’s chief executive Castle.

Justin Beckett, managing director of Belton Farm in Whitchurch, Shropshire © Jon Super/FT

Justin Beckett, managing director of Belton Farm in Whitchurch, Shropshire, which sells more than 1 million pounds of cheese to Canada as part of a turnover of 40 million pounds a year, said exporters would “hit a brick wall” unless there are temporary access arrangements would be expanded.

“This couldn’t have come at a worse time,” he added. “Due to the challenges in the UK market in terms of cost of living, we want to expand exports, but if the issue is not addressed we will all be left with around half a shipping container of products that are not profitable.”

Of the £785.4 million worth of cheese the UK exported in 2022, 18.7 million pounds were shipped to Canada, accounting for 2.4 per cent of the UK cheese sector’s total exports, according to the Food and Drinks Federation, a British trade organization.

Trade experts say Canada may be unwilling to continue importing British cheese if the UK is unwilling to reciprocate on other goods such as meat. Canadian beef is not currently available for sale in the United Kingdom, where hormone-treated beef is banned, a rule inherited from the EU.

Sam Lowe, partner at consultancy Flint Global, said negotiations would be difficult. “Canadians don’t want to import foreign cheese; The British do not want to change their food standards to make it easier to import Canadian beef.”

Trade experts say Canada may be unwilling to continue importing British cheese if the UK is unwilling to reciprocate on other goods such as meat © Jon Super/FT

Trade issues between Britain and Canada are politically sensitive in Canada, where the livestock industry launched a campaign in September calling on Ottawa to block Britain’s membership of the Asia-Pacific trade bloc CPTPP.

The industry complained that the agreement gave British beef farmers unfair access to Canada and called on the Canadian government to use its current talks as leverage. “We have the opportunity to remove these trade barriers with the bilateral agreement currently being negotiated between Canada and the UK,” the activists said.

William Bain, head of trade policy at the British Chambers of Commerce, said the fairest outcome would be for the terms of the cheese subcontracts to be extended until negotiations on a new free trade agreement between Britain and Canada are completed.

The Ministry of Economy and Trade said it had no comment on the live negotiations but that “decisions about our high food standards were never up for negotiation.”

“Our priority remains to secure a best-in-class trade deal with Canada that delivers benefits to British businesses and consumers – including dairy farmers,” they said.

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