Irish bakeries are warning that an increase in the price of sliced pans is “inevitable” as a result of Brexit. Why is this?
It is (mostly) about flour – the right type of flour. The State is not self-sufficient in flour, with Food Drink Ireland (FDI) estimating that as much as 80 per cent of the flour used in bakeries here is imported.
A great deal of this comes from British millers, which at first glance might not seem like a problem – the UK and the EU struck a trade and cooperation agreement (TCA) that averted tariffs on imports and exports from one to the other. The issue is when the materials that form part of the export are actually of “third country origin”. Then, tariffs can kick in.
“Under the rules of origin in the TCA, there is a requirement that the wheat used should be of UK or EU origin, with a maximum tolerance of 15 per cent for grain from other countries such as Canada or the US,” says FDI director Paul Kelly.
If the wheat used to make flour is more than 15 per cent of third country origin, a full tariff of €172 per tonne becomes payable – a 50 per cent increase in the product cost.
Irish bakeries did some “prudent stockpiling” of flour before Christmas, helping to keep consumer prices flat in the first part of January. But an increase is inevitable “fairly imminently”, according to the Irish Bakery Association (IBA).
“Bakeries won’t be able to afford to absorb the rising price of flour and other ingredients for much longer,” says IBA secretary Gerald Cunningham.
How much will prices go up?
The IBA, which represents craft bakers, says prices could soon be 10-15 per cent higher, while FDI suggests 9 per cent, which is based on earlier projections from the Economic and Social Research Institute (ESRI) on the impact of the flour tariff alone.
