Cheese mountain in the US

The US has amassed the large stockpile of cheese since records began 100 years ago. If gathered together. the different varieties of cheese would weigh 630 million kilograms and occupy roughly the same amount of space as the Capitol building in Washington DC.

Stocks have increased because processors have more milk than they can cope with, and it is easily stored as cheese. Milk production has reached record levels thanks to selective breeding and consolidation in the agriculture industry, but consumption has fallen as consumers have embraced non-dairy alternatives such as almond milk. The average American now drinks 18 gallons of milk a year, barely half of what they drunk in the 1970s.

In 2016 the US agriculture department bought more than 40 million kg of cheese to reduce a surplus that was 16 per cent smaller than the current one.

When the EU had extensive intervention buying, cheese was not included with one or two minor exceptions.

Import threat to sheepmeat sector

Australia and New Zealand are pushing the UK to open its food market after Brexit and allow the same quota of low-tariff imports as they send to the whole of the EU. The UK would mirror the tariff rate quota of the whole EU bloc which would mean that larger imports of sheepmeat would be admitted tariff free. It is also likely that Australia would be interested in increasing their exports of cheese to the UK.

This could be devastating for the sheepmeat sector which has always been the most vulnerable to Brexit through a combination of increased imports and tariffs on exports to the EU. Upland farming is highly reliant on sheep.

The Government has produced some warm words, but Defra secretary Michael Gove has talked about 'an outcome that is net positive for UK agriculture.' In other words, some vulnerable sectors could take a hit.

Applying the whole EU TRQ to the UK would avoid the tricky problem of dividing it up while the EU would want to avoid a situation where its trading partners demanded compensation because the UK's departure would make their access quotas less valuable than before. This would particularly apply where an exported product is popular in the UK which is true of sheepmeat. It would also offer lower prices for consumers. Sheep farmers may have a tough fight on their hands.

Trade deal with Japan offers boost to farmers

A trade deal between the EU and Japan, which has required four years of negotiations, will provide duty free access for almost all agri-food exports, although there will be a transitional period. For example, transition periods for phasing out all tariffs on hard cheese will last 15 years. It does cover pasta, confectionery and chocolate.

Current duties on food are high, ranging from 15 per cent on wine to 30 to 40 per cent on cheese.

A major stumbling block in the talks was Japan's reluctance to open up its dairy sector to European imports. There will be full tariff elimination for some cheeses and other dairy products, while in other cases a quota system would apply under which duty free access would be granted up a threshold. Soft cheeses will be covered by a duty free quota larger than the current volume of exports.

Protecting niche products after Brexit

Will Orkney cheddar cheese still enjoy protection after Brexit? Geographical indications as they are called are on the agenda again, so I thought it might be helpful to reproduce below what I wrote for our Yorkshire Agricultural Society report with the concluding paragraphs drafted by an agricultural trade lawyer.

Seventy-six names in the UK, including food products, wine, beers and ciders, are registered under the EU’s geographical protection schemes. There are three main programmes: protected designation of origin (PDO), protected geographical indication (PGI) and traditional speciality guaranteed (TSG).

Government sources told The Times that securing a “rollover of current arrangements” was the best option. Officials are also looking to see if speciality recipes or regional provenance can be protected using trademark regulations under domestic intellectual property rights laws. Matthew O’Callaghan, of the Melton Mowbray Pork Pie Association, called for a swift resolution. “It would be very damaging to leave these schemes,” he said. “There are some products that are exported, it would be damaging for them within the EU. More important for us is the issue of copying within the UK. It is the EU that has saved a lot of British food heritage."

[From our repoort] The basic idea behind geographical indications (GIs) is to prevent a domestic producer giving a name to their own product that gives the impression to consumers that it comes from the protected region covered by the GI, e.g., Parma ham. It is seen as a means of preventing the public from being misled by producers jumping on the bandwagon of a successful GI and also to prevent unfair competition.

The EU has been favourably disposed to GIs because it sees it as a means of encouraging high quality, value added food production in the EU which will increase returns to farmers. This has led to some conflicts with producers elsewhere in the world, e.g., with the United States over parmesan cheese. Given the EU’s support for GIs, it is likely that they would insist on the UK recognising EU GIs in any future trade agreement. This could well become a contentious issue in any trade negotiations between the EU and UK after Brexit.

What value GIs offer to British farmers is an interesting question. Niche products, e.g., Orkney Island cheddar, are often involved, although these may be important to local economies. In Yorkshire in particular, the following products are covered by GIs: Swaledale cheese; Swaledale ewes cheese; Yorkshire Wensleydale.

GIs are established by EU regulations and there is no UK legislation needed. GI protection in the UK would lapse on Brexit and EU protection of UK GIs could be expected to lapse as well. The UK would probably have to offer some minimum standard of protection to European GIs. Indeed, under WTO rules, the UK would be under an obligation to implement some form of legal protection. In an earlier TRIPS case India-Patent Protection for Pharmaceutical and Chemical Products WT/SDS79/R (albeit one on patents and not on GIs as such), the Appellate Body went out of its way to say that the need to offer protection was a positive obligation on the part of the WTO member.

If Brexit does occur, our view is that it is likely that the WTO rules in TRIPS require the UK to offer a minimum standard of protection for products protected by EU GIs, although the form and level of that protection remains unclear. These are complex matters as is evident from the example below.

It is possible that the WTO rules may have made the position clearer – and also better for UK farmers On our understanding, the Dispute Settlement Panel in EC — Trademarks and Geographical Indications (WT/DS174/R) upheld the principle that foreign nationals should have proper access to the EC’s GI system (https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds174_e.htm), with the EC subsequently amending the system so as to comply with the WTO decision: see Council Regulation (EC) No 509/2006 of 20 March 2006 on agricultural products and foodstuffs as traditional specialities guaranteed and Council Regulation (EC) No 510/2006 of 20 March 2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs.

Significantly, the latter expressly recited that ‘[t]he protection afforded by this Regulation, subject to registration, should be open to the geographical indications of third countries where these are protected in their country of origin’. (For the current legislation, see Regulation (EU) No 1151/2012 of the European Parliament and of the Council of 21 November 2012 on quality schemes for agricultural products and foodstuffs.) Accordingly, it would seem that UK farmers post-Brexit might legitimately expect to be able to continue to take advantage of this form of ‘quality marketing’ within the EU.