The Irish Mail on Sunday
Banana bread could be toast in Brexit flour blow
Lockdown baking hobbies could be hit as tariffs target imports of UK f lour made with wheat from Canada
CANADA is posing a new problem for the Government on the entirely unexpected front of baking and breadmaking.
Canadian wheat plays a critical role in the British milling industry, which imports 45% of its flour from its former colony.
The scale of Canadian imports means that all subsequent exports of British flour products to European countries, under complex Brexit rules, attract major tariffs.
Dail questions from the Green TD Patrick Costello have revealed that Ireland is poised to become a major casualty of the new rules.
Mr Costello asked Tánaiste Leo Varadkar for his views, ‘on the post-Brexit reality of the application of the rules of origin laws that sees Irish bread producers facing higher production costs than their UK counterparts due to having to import flour that is not being milled domestically’.
During lockdown, home baking has become a popular activity and banana bread has become a particular favourite of home bakers.
However, a minimum of 80% of the flour used in baking is imported from the UK, owing to the absence of an Irish milling industry.
Senior sources told the Irish Mail on Sunday: ‘The current dependence on UK flour has serious implications both for domestic and commercial bakeries.’
‘It is,’ one source said, ‘part of the laws of unintended consequences where Ireland imports our flour from the UK. Our aspirant Mary Berrys will soon have to pay a great deal more to play Bake Off.’
Ireland does not have a native milling industry because, owing to our climate, the quality of our grain is more suitable for brewing or cattle feed than for flour milling.
It is believed that as a consequence of Brexit the new rules could see tariffs of 50% slapped on to flour. This, one source said, ‘has huge implications for the Irish bread industry.’
Mr Varadkar replied to the queries saying he was:
‘acutely aware of the issues that have arisen for the bakery sector’.
The Tánaiste said the speed with which Brexit was implemented had not ‘allowed many sectors, including the bakery sector, to prepare for the implications arising under the specific rules of origin provisions of the agreement.’
He confirmed that World Trade rules meant that the current high proportion of 45% Canadian wheat in UK flour ‘puts it outside of the scope for benefiting from the preferential tariff rates’.
Mr Varadkar said that before Brexit: ‘The trade agreement between the EU and Canada addressed this issue but the UK is no longer a beneficiary of the Comprehensive Economic and Trade Agreement (CETA) with Canada and there is no three-way free trade agreement between Canada, the UK and the EU.’
Mr Varadkar said: ‘My department and I are fully conscious of the potential employment and cost implications arising for the sector. I also recognise the competitive disadvantage that the sector faces in retaining UK market share when faced with competitors that are not affected by the tariffs given how the Irish sector’s supply chains have been constructed over many years.’
In the case of the tariffs on flour, Mr Varadkar said: ‘My officials have examined the issue with colleagues in Revenue to explore what technical solutions may be available within the terms of the TCA [Trade and Cooperation Agreement], including that of using inward processing relief [to obtain relief from Customs Duty and VAT].
‘Such inward processing solutions can assist companies in terms of retaining UK market share, but I appreciate that it does not provide a complete solution for the issues presenting on the domestic market.
‘In that latter regard, I recently wrote to the [European] commission executive vice-president and trade commissioner Valdis Dombrovskis on the issue and raised the matter with him when we spoke last week.
Mr Varadkar added: ‘Given that the conclusion in late December did not allow time for the sector to make the necessary adjustments in its supply chains, I have asked the commission services to examine the issue to consider any flexibilities that can be applied.’
Mr Varadkar told the Irish Mail on Sunday: ‘Unfortunately this is one of the many negative consequences of Brexit, something which was not our idea and we were never in favour of it.
‘I know that those sectors that use flour have been particularly affected. It’s come up at our regular engagements with the industry. I’ve raised the issue with the trade commissioner in a letter and also over the phone, highlighting the sector’s plight.’
Mr Varadkar added that our current plight could morph into an opportunity. Ireland, he said, ‘stopped milling years ago so, as it stands, we can’t produce flour here and are reliant on imports. That might have to change in the future and indeed it might actually be a good opportunity for someone to set up a mill here.’
The Government, he added, ‘would help in whatever way we can. In the meantime, I’ve asked the EU to look at the issue and see if there is any flexibility’.
A departmental source said that when it comes to the avoidance of tariffs in the case of flour, an upper limit of 15% third-country wheat input to UK exports of flour to the EU is allowable.
‘Currently, some of the flour that is being imported from the UK to Ireland contains 45% Canadian wheat, which puts it outside of the scope for benefiting from the preferential tariff rates.
‘Flour containing more than 15% Canadian wheat, imported into Ireland from the UK, attracts a tariff of €172 per tonne. Pre-Brexit, there was no such tariff.’
‘Aspirant Mary Berrys will have to pay more’
‘Good opportunity to set up a mill here’