August 11, 2020 11:35 AM

Grate expectations: Why Truss is right to champion cheese in trade talks

By Flora Hutchings,
Best for Britain's Head of External Affairs


Liz Truss has built a reputation of sorts as a champion of cheese. 

Those who have followed her political ascension may have got a blast of cheesy déjà vu this week when stories emerged from Japan that trade talks had hit a sticking (or stinking) point over the status of Stilton, as Britain battled to get a better deal for this blue-veined bastion of aromatic snacking.

Back in 2014, Truss gave a vaguely weird speech to the Conservative Party Conference in which she highlighted the ‘disgrace’ of Britain importing two-thirds of its cheese.

It was the manner of her delivery rather than the message which landed her on Have I Got News For You and, two years later, had the Huffington Post still proclaiming her speech to be ‘The best dairy-based rant you’ll ever see’.

But do those who saw her performance as indicating she was one cheese sandwich short of a traditional British picnic have a point, or is there a valid reason for Stilton to hold up a much-needed trade deal with Japan?

The truth, inevitably, is a little more complex than the headlines would have you believe.

Sweet dreams are made of cheese

First, a little context about the true worth of cheese. Globally, the trade in cheese was worth a cheddary sniff under £25billion last year.

Now, that’s not exactly challenging the automotive or aerospace sectors in terms of scale but there’s good business to be done.

In 2018, UK cheese exports reached a record £665million, making us one of the  top-10 global cheese giants.

Last year, we slipped back to 11th place in that table but still grew our exports to almost £708million, making cheese our fourth-biggest food export after whisky, salmon and chocolate.

In short, although it’s all too easy to mock, cheese is big business if you’re in the food game.

Cheese a jolly good fellow

And there’s another factor at play here. As a rule, the EU has been the main market for UK cheese, with the Republic of Ireland scoffing more than anyone else.

But demand has been growing from Asian consumers, and growing rapidly.

In the five years that followed Liz Truss’s 2014 cheesy rallying call, British cheese exports to Asia leapt by 289 per cent. Exports to the huge EU market were up 39 per cent – again, cheese is big business, and it’s a sobering reminder of just how much is at stake if Britain and the EU can’t agree a comprehensive trade deal by the end of this year.

The biggest growth was in China: in 2014, our cheese sales there were more of a trade rounding error, at just £67,000. Fast-forward to 2018 and cheese exports to China had gone up by almost 10,000 per cent to £6.5million.

In fact, seven of our fastest-growing cheese export markets were in Asia.

Edamed if you do

Trade, of course, is a two-way process, and here’s where we start to see why trade talks are tricky beasts.

Britain may export a lot of cheese but we import even more. A lot more, in fact.

By one calculation, the UK’s cheese trade deficit – how much more we import than export – is a nice, round, truckle-shaped £1billion.

You read that right: when all is said and done, and eaten, we send tons of cheese around the world, then spend all of the money we make, plus a billion pounds more, on buying in tasty foreign cheeses.

Liz Truss, it transpires, was actually making a good point, if not a good speech.

And there is another cheese twist in this tale.

This takes the cracker

Britain’s £1billion cheese deficit is pretty-much world-beating. Wallace, Gromit and every other cheese-addicted Brit help the UK occupy the joint-top position in the table of nations with a serious cheese-buying debt problem.

The other country with a £1billion cheese deficit just happens to be … Japan.

Now, transport yourself to those trade talks. Bear in mind those figures you’ve just read and bear in mind also that, when the EU and Japan edged towards a trade deal in 2017, those talks were, literally, dubbed the ‘Cars for cheese deal’.

This stuff is not new. Yes, the headlines this week may be about Stilton holding up a trade deal, and the bemusing stats may show that Britain shifted a mere £102,000 of the blue-veined stuff in Japan last year.

But don’t be fooled. Stilton is a handy distraction from what is a very significant element of any trade deal with Japan.

And there’s one final cheese-shaped piece in the international trade puzzle…

Everyone wants a slice

Most of the global cheese giants are European: Germany, Netherlands, Italy, France, Denmark, Ireland and Belgium are all in the top-10, above Britain.

And, if you look at which countries have the biggest advantage, in terms of exporting more cheese than they import, then Netherlands, France and Italy top the table, with Denmark and Ireland also in the top-10.

In fact, Ireland’s cheese trade surplus rose by almost 57 per cent from 2015 to 2019 (Italy’s surplus grew by 107 per cent over the same period and, in a reminder that we operate in a global economy, the US growth was 377 per cent).

So, Japan doesn’t want to offer us a deal that winds up all those other European countries. Meanwhile, those other European countries are watching with interest what happens to Britain’s export costs not just to Japan but to Europe, in particular.

Because they are ready to pounce if we don’t agree a comprehensive full-fat trade deal. No deal, or a thin, miserable, string-cheese deal, will see tariffs hit Britain’s trade.

So consumers will be hit by price increases – remember, a thin deal under World Trade Organisation rules mandates tariffs – and British farmers will, overnight, see the competitiveness of their produce slashed. It’s an old-fashioned lose-lose, however you try to dress it up.

Can we triple cheese production by January and become self-sufficient? Can we find ways of creating French, Italian and Dutch speciality cheeses in the next few months? You know the answer to that one.

We need Liz Truss and her team to land a Japanese trade deal, one that covers cars and cheese just like the EU arrangement we’re walking away from.

But we also, desperately, need a trade deal that covers cars and cheese and a whole lot more besides with our biggest trading partner, the one just over the sea.

Because one thing is for sure: we cannot have our cheese and eat it.

 


Flora Hutchings
Head of External Affairs, Best for Britain

Follow us on Twitter at @BestforBritain


 

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