Bread and pizza prices now set for Brexit rise
:: No exemptions from flour import rules
IRISH white sliced pan, pizza dough and wholemeal bread all face price hikes because of Brexit-related tariffs.
It is feared that pleas from the Government for an exemption from the rules will fall on deaf ears in Brussels. Although the EU agreed a trade deal with the UK in December, a particular blend of UK flour used by Irish bakers has been caught in the tariff net.
Tánaiste Leo Varadkar recently wrote to EU vice-president and trade chief Valdis Dombrovskis asking him to “consider any flexibilities that can be applied”.
A Commission spokesperson said this week that they were “looking into the matter, as it is technically complex”.
However, the bloc has said previously that it does not grant opt-outs from trade rules.
The EU fears it would set a precedent and open a back door to its market for UK products. The British government’s unilateral decision this week to extend grace periods for food and parcels bound for Northern Ireland has made Ireland’s request even more difficult.
Food Drink Ireland, an Ibec group, has warned about price rises, and estimates tariffs will push up production costs by 50pc and force bread prices up by 9pc, making Irish products more expensive than those in the UK or EU. The costs could soon hit Irish producers, once they run down their Brexit stockpiles and renegotiate contracts with supermarkets.
IRISH white sliced pan, pizza dough and wholemeal bread all face price hikes because of Brexit-related tariffs.
It is feared that pleas from the Government for an exemption from the rules will fall on deaf ears in Brussels.
Although the EU agreed a trade deal with the UK in December, a particular blend of UK flour used by Irish bakers has been caught in the tariff net.
Tánaiste Leo Varadkar recently wrote to EU vice-president and trade chief Valdis Dombrovskis asking him to “consider any flexibilities that can be applied”.
A Commission spokesperson said this week that they were “looking into the matter, as it is technically complex”.
However, the bloc has said previously that it doesn’t grant opt-outs from trade rules.
The EU fears it would set a precedent and open a back door to its market for UK products.
The British government’s unilateral decision this week to extend grace periods for food and parcels bound for Northern Ireland has made Ireland’s request even more difficult.
The Brexit small-print caught many businesses and Government officials unaware when the trade deal came into effect on January 1.
Food Drink Ireland, an Ibec group, has warned about price rises and called for an opt-out for the Irish bakery sector.
It estimates tariffs will push up production costs by 50pc and force bread prices up by 9pc, making Irish products more expensive than those produced in the UK or the EU.
Ireland imports around 90pc of its flour from the UK, according to Bord Bia. But some of that flour contains 45pc Canadian wheat. And complex ‘rules of origin’ limits allow for a maximum of 15pc grain from outside the EU or UK. Any amount above that threshold incurs a tariff of €172 per tonne.
There are few alternative suppliers in Ireland since the majority of mills here have been closed down. The costs could soon hit Irish producers,
once they run down their Brexit stockpiles and negotiate new supply contracts with supermarkets.
“Supermarkets may say, ‘we’re not increasing prices’. That’s when the bakers will have to suck it up,” said Edgar Morgenroth, professor of economics at Dublin City University’s Business School. But he said Irish bakers can find alternative suppliers within the EU.
“There is zero reason – no reason whatsoever – for bread prices to go up. You don’t have to buy your flour in the UK,” he said.
Enterprise Ireland has been working with Irish companies to help them source different suppliers, but it takes time. Canadian wheat is what gives Irish products their distinctive taste, said Alex Waugh, director general of UK Flour Millers.
“We’re a bit stuck,” said Mr Waugh. “Nobody eats sliced pan [in mainland Europe], it’s a British Isles thing. In general, the millers have no experience of the flour to make that kind of bread.
“It’s not just as easy as switching the wheat for another. That takes a bit of time. What do bakers do in the meantime? Pay the tariff? That’s expensive. Switch the grist? Then you end up with a different product, which customers might not like.”
Fianna Fáil MEP Barry Andrews is sceptical the EU will agree to Ireland’s request for an exemption.
“Reopening the agreement could lead to an expectation on the UK side of permanent negotiation. Nevertheless, it is important that we make every effort to avoid unnecessary barriers to trade.”