No-deal Brexit likely to push up price of bread in Ireland

The humble loaf has emerged as an unlikely casualty of a no-deal Brexit in Ireland, with prices charged by commercial flour suppliers in Belfast set to rise due to cross-border tariffs.

There are just three flour mills on the island of Ireland and the only two that can supply industrial quantities are in Northern Ireland.

“We have two mills in Belfast and 60% of their output goes into the Republic of Ireland. Ireland doesn’t have any bulk commercial mill at all and imports the rest of its flour from the UK,” said Michael Bell, the executive director of Northern Ireland’s Food and Drink Association.

Under a no-deal Brexit, flour would be subject to a tariff of €172 a tonne, which could add around 15 cents to the price of a humble sliced loaf.

“We are not talking about there being no bread on the shelves, but that it is just going to be more expensive and depending on your income that will be more or less significant,” said Alex Waugh, the director general of the National Association of British and Irish Millers (Nabim).

In a no-deal scenario, EU tariffs will be applicable on a range of food items coming into Ireland from the UK.

The tariffs on flour will hit bread, biscuits, cakes, confectionary and commercially produced frozen pizza assembled in factories outside Dublin but destined for the massive UK market.

For Irish bakers, the choices are to absorb the cost, pass it on to the consumer or source flour in France, Germany or Lithuania.

“Can you source the flour in France? No,” said Bell. “Their mill structure is different and their flour has a different protein content which is good for baguettes but not for high-rise bread.”

Bakers have looked at getting flour further afield, in Germany or Lithuania, said Waugh but the cost of getting it back to Ireland added significant overheads and logistical challenges.

Currently, Ireland imports about 150-170 28-tonne tankers of flour a week from UK, with one third from Northern Ireland and two-thirds from Britain.

Bakers south of the border are looking at stockpiling flour but that is not considered a sustainable solution.

“It is the thing that people often forget in this debate, that tariffs are a tax and they are a tax on consumers because there just isn’t sufficient margin in the supply chain to fully absorb so the costs will be passed on,” says Paul Kelly, director of the Food and Drink Industry Ireland.

He sees a no-deal Brexit as a disastrous misapplication of tariffs, which are designed as a tool to protect European farmers and food production for social reasons.

“The social contract operating here is that farmers have a high cost base because of the high cost of living in the EU, high standards of regulation and safety that they have to adhere to,” he says.

Bell thinks the British government simply doesn’t consider food production seriously enough or understand that the supply chains on the two islands are so interconnected because of the efficiencies needed to keep prices down.

“Some supermarkets have said: ‘Tariffs are not our problem, it’s the suppliers’ problem.’ Suppliers are saying: ‘We beg to differ.’ They are saying they are not going to take it at all, which means suppliers will end up having to break contracts because they won’t be able to supply at below cost,” says Bell.