December is the month we get to shamelessly indulge in dairy’s most delectable category. Cheese boards groan beneath assorted shapes, sizes and hues; gift hampers are stuffed with blue stilton and sweet chutneys. But this pungent, crumbly, umami fun is in jeopardy.
Last month, US president Donald Trump slapped a 25 per cent tariff on cheese varieties from the EU that read like a veritable ‘Who’s Who’ of the dairy world: parmigiano-reggiano, Swiss, romano, roquefort, manchego and cheddar. The reason? Curdling trade relations with Europe.
In fact, cheese has become an innocent bystander in a trade war that originated from a very different source. The dispute began when the US accused the European Union of illegally subsidising aircraft manufacturer Airbus. The EU retaliated, claiming that the US had illegally subsidised Boeing to the detriment of competitors like Airbus. The result? The Trump administration imposed tariffs on $7.5 billion of EU goods. After October 18, prices soared for items including aircraft products, wine, olive oil and – most harrowingly – some cheeses.
“Cheese consumption is the highest right around Thanksgiving through New Year, so the tariffs couldn't have come at a worse time,” says Catherine Donnelly, professor of nutrition and food sciences at the University of Vermont and editor of the Oxford Companion to Cheese. “A lot of our specialty food stores and purveyors are very nervous because they haven't known how to price cheese for the holidays.”
“The effects of the tariffs started back in May,” says Phil Kafarakis, president of the Speciality Foods Association. “It was really alarming. Everybody was very concerned and watching carefully – a lot of the importers started to buy products and build their inventory early.” He says at this time importers were anticipating the possibility of a 100 per cent tariff, ratcheting panic up even further. But the 25 per cent tariff that was finally introduced is still having a noticeable impact. “Consumers are now buying products at different outlets, at a much higher price point,” says Kafarakis. “Depending on the retailer, they’re either passing the 25 per cent price hike straight along to the consumer, or spreading it out across the entire product category.”
The hike in prices is already bludgeoning the UK’s £196 million cheese market. Although the vast majority (82.63 per cent) of the UK’s cheese exports in volume goes to the EU, the US is the second biggest buyer, loading up on 1,948 tonnes of UK cheese in the first three months of 2019 alone.
“It’s having a financial impact on us, our customers and our distributors,” says Ben Hutchins of Lye Cross Farm, one of hundreds of UK cheese producers. He claims the tariff has cost the business around £200,000 so far, “a fairly substantial sum to take on”. However, he believes some of the company’s competitors will be far more impacted due to different supply arrangements.
“So far, everyone’s been trying to help each other. It’s been fairly amicable and we’re trying to work our way through it,” says Hutchins. At present, he says the “pain” is being shared out across farmers, distributors and customers. However, the landed cost of the product (the total price upon arriving at a buyer’s door, including the original price of the item combined with transportation fees and any other taxes, tariffs, handling or payment fees) will be sure to rise, Hutchins adds. If the tariff sticks in the long-term, the result will be UK cheese becoming uncompetitive compared to any cheese produced in the US.
If a burgeoning competition rises in the US, UK producers could find themselves drowning in cheese. This is because the EU imports about $140 million in dairy products from the US, while the US imports a staggering $1.5 to $1.6 billion from the EU.
One reason US cheeses have lagged behind their European counterparts is that the pedigree of European cheeses is fiercely defended. They’re granted protected geographical status, meaning even if an American cheese is exactly the same in character and composition, it cannot moonlight as a manchego or roquefort.
‘American cheese’ has long been synonymous with limp, pre-packed slices barely distinguishable from the plastic they’re layered in. Where else on Earth could have dreamt up cheese spray or – worse? – squeezable liquid cheese, the dubious qualifier ‘Real Cheese!’ scrawled on its side. So could the tariffs help America’s fledgling artisanal market finally take off?
Case in point: a blue cheese produced by Rogue Creamery in Oregon beat out 3,804 entries from 42 countries to be crowned winner of the 2019 World Cheese Awards that took place in Bergamo, Italy. An astonishing feat given American cheese’s less than illustrious reputation.
Shifting consumer tastes are also opening up demand. “Millennials are obsessed foodies and they want locally produced high quality goods that are manufactured under sustainable practices,” says Donnelly. Typically, American artisanal cheeses, due to smaller economies of scale, have also been priced higher than their European counterparts. Now, finally, they could get more of a look-in.
US cheese artisans’ biggest obstacle is the Food and Drug Administration (FDA), which has a long standing antipathy towards independent cheesemakers in the US. In recent years, the FDA has threatened action against the use of wooden boards to age cheese – a method that’s been used for centuries – and the use of ash in cheesemaking, that adds a distinctive charcoal swirl to some varieties. In addition, they set the permitted levels of non-pathogenic E-coli in cheeses far below those in the EU.
In her most recent book, Ending the War on Artisan Cheese, Donnelly interrogates this behaviour. “I constructed a timeline looking at trade activity juxtaposed against regulatory activity and asked the question, ‘Were these regulations really designed to improve the safety of cheeses? Or were they designed to be trade barriers?’”
The cumulative effect of this activity benefits industrial US dairy producers, like Kraft of squeezable cheese fame. “I don't think artisan cheesemakers would be necessarily gleeful about these tariffs because they could be the next victims,” says Donnelly.
There’s another reason why this tariff might not be a boon for the US’ small scale cheese producers. “They are going to have a very difficult time with their supply chain and transportation costs because they share distribution channels with products from the EU,” explains Kafarakis. “If you have a container that’s coming in, and you’re going to move it from New York to Chicago or Florida, you're going to pay more money, because there's less European goods on that container.”
But where one opportunity shuts down another opens up. The trade war between the US and Europe is dwarfed by another between the US and China. For the UK, this could be a surprising upside. China has levied tariffs on US cheese, meaning the appetite for UK cheese could increase. “We may actually benefit from that,” says Hutchins, pointing out that a loss of volume and increasing costs to trade with the US could be partially recovered through increased cheese trade with China.
China is not a big market for UK cheese at present (right now, the nation buys a lot of Australian and American cheese). “But it’s growing,” says Hutchison. “There are a number of UK exporters already there, the volume is rising and it’s definitely going to help.”
This article was originally published by WIRED UK
