Irish bakers latest casualty of Brexit trade deal as new tarrifs cause rise in product costs

UK – The UK’s new Trade and Cooperation Agreement (TCA) with the EU is resulting in additional tariffs being applied to Irish flour imports.

The new deal stipulates that if the wheat used to make flour is more than 15% of third country origin, the full tariff of €172 (US$209) per metric ton becomes payable.

According to projections from the The Economic and Social Research Institute (ESRI), the full tariff per metric ton on imported flour would equate to a 9 percent consumer price increase in bread.

Ireland currently imports around 80 percent of the flour, mainly from Great Britain and has no industrial milling options available since the closure of a number of mills in recent years.

Unlike customs procedures, which the industry was prepared for, the rules of origin only became clear when the TCA was published on December 24, 2020 – leaving businesses with little time to prepare.

The change thus presents a significant problem for the Irish Bakery industry, which purchases flour from millers in Great Britain with a high proportion of third country wheat, mainly Canadian or US which is rarely below the 15 percent tolerance level.

If fully implemented, the new tariffs are projected to cause a 50% in production costs for Irish bakers, putting them at a greater disadvantage to their competitors from Great Britain, Northern Irish or EU who are not subject to the same tariffs.

In an interview with FoodIngredientsFirst, Alex Waugh, director of UK Flour Millers said:  “We have certainly noted the impact of this issue, and indeed the concerns of the flour milling sector were raised directly with the Commission and UK government on more than one occasion before the TCA was signed”.

“We particularly highlighted the potential impact of the now agreed upon Rules of Origin on Irish bakers and consumers.”

FDI is also flagging the issue of a distorted Irish marketplace and calling for a repeal for the Irish bakery sector in order to avoid these tariffs.

“In order to avoid distortion of trade and negative impacts on Irish consumers we are seeking a derogation for the Irish bakery sector from this specific Rule of Origin in order to deliver a tariff-free solution and put the businesses on a level playing field with UK and EU bakery competitors,” says Kelly at FDI.

Alex Waugh, director of UK Flour Millers, agrees with the FDI executive that the most obvious would be a slight adjustment to the product specific rules of origin applying to wheat flour.

But its not just wheat that has been affected by the new Brexit trading rules, other critical exports – particularly seafood – remain constricted due to the new customs regulations that have come into effect.

UK traders have previously expressed that it will take some weeks before the full impact of the nascent trade deal will come into clarity.

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