The price of bread on shop shelves could rise by 9% as a result of tariffs being applied to flour imports to Ireland under the EU-UK trade deal brokered on Christmas Eve.
Under the rules of origin in the deal, Paul Kelly of Food Drink Ireland (FDI) has said there is a requirement that the wheat used should be of UK or EU origin, with a maximum tolerance of 15% for grain from other countries, such as Canada or USA.
“If the wheat used to make flour is more than 15% of third country origin, the full tariff of €172/t becomes payable.
“This is a significant problem for the Irish bakery industry, which purchases flour from millers in Britain with a high proportion of third country wheat, mainly Canadian or US, which is rarely below the 15% tolerance level,” he said.
FDI, the IBEC group representing the food and drink sector, has said the implications of this tariff for the bakery industry are very serious and has called for a derogation for the Irish bakery sector in order to avoid these tariffs.
By exceeding the tolerance, the full tariff of €172/t will apply to flour imported from Britain and FDI has said this is equivalent to a 50% increase in product cost.
Based on projections by the Economic and Social Research Institute (ERSI), this would equate to a 9% consumer price increase in bread.
“There are no industrial milling options available in Ireland since the closure of a number of mills in recent years and since then, Ireland has not been self-sufficient in flour,” Kelly said, adding that Ireland imports 80% of the flour used in the baking sector.
This flour comes mainly from Britain and the product specifications for much of that requires a higher percentage of US or Canadian wheat than allowed for in the tolerance rule, he said.
“This results in a distorted marketplace where a GB, Northern Irish or EU-based bakery competitor, using the same specification flour, but not facing the same tariff will be at a significant competitive advantage selling their finished product in the marketplace versus an Irish-based bakery.
“This is a problem uniquely faced by Irish-based bakeries.
“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,” he said.