Paying 15c more for a loaf after Brexit? Irish bakeries eye flour beyond Britain

Michael McCambridge, managing director of McCambridge’s, says they are pointing more towards

Irish bakeries have stockpiled flour, sourced alternative supplies from Europe and sought ways to minimise tariffs on British flour in preparation for a potential collapse in EU-UK trade talks.

About half the flour used by Irish bakers comes from England with the other half sourced from three mills on the island of Ireland – Allied Mills and Andrews Flour in Belfast and Odlums in Portarlington, Co Laois. These mills have limited capacity to substitute for supply from English mills.

The large proportion of flour coming from Britain could mean heavy tariffs on imports, €172 per tonne, or an increase of 35-40 per cent on the cost of flour imports under a no-deal scenario.

Increased costs could be passed on to consumers, adding up to 15 cent to a loaf of bread. Under no-deal contingency planning, Irish bakeries have sought to open new supply lines from continental Europe, sourcing flour from Germany and France.

“The fear of the year ending without an agreement has risen so no-deal planning across the board is really switched on,” said Alex Waugh, director of the National Association of British and Irish Flour Millers.

The large quantities of flour required by bakeries – about 4,000 tonnes of flour are imported into the Republic from the UK every week – means there is limited capacity to stockpile ahead of World Trade Organisation tariffs applying if there is no trade deal by January 1st.

“There would be efforts that the silos are fully stocked by the end of the transition period,” said Linda Stuart-Trainor, director of prepared consumer foods at industry group Food Drink Ireland.

“For product categories that use a lot of flour, that can only get them so far because of the volume of space and the way it is stored, they cannot store too much of it in advance.”

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Turning to Europe

She estimates that about 30 per cent of grocery products contain flour. Irish firms have had to turn to Europe to reduce reliance on UK-imported flour.

“Every company has certainly looked at it. We would still intend to import large quantities of flour from the UK in the short term. Maybe in the longer term, things may evolve,” she said.

Buying flour from French and German mills carries additional costs.

“That is a perfectly sensible thing to do but we shouldn’t kid ourselves that that means that nothing changes. The cost of freight is quite high so it is not cost neutral,” said Mr Waugh.

Michael McCambridge, managing director of Dublin bakery McCambridge’s, buys packaging in the UK for which he has “a hedge” until June to give him time to find other sources.

“We are pointing more towards the EU for anything we can get in the future rather than defaulting to the UK,” he said.

UK mills are looking at milling EU wheat which, Mr Waugh estimates, could shave €100 off the per-tonne tariff on exported British flour.

Large amounts of baked goods made with British flour are sold back into the UK so some in the industry believe customs arrangements can be put in place.

“You could get relief on your tariffs. It is not as simple as saying that there is going to be €172 a tonne and no supply,” said an industry source.

Costs could be passed on to the price of a loaf of bread with tariffs.

“The likelihood is that there will be an inflationary impact,” said Mr Waugh.

Mr McCambridge said the pandemic might not make this inevitable.

“Whether the price of a loaf of bread will rise is another issue because of the competitive issues in the marketplace between retailer and bakery,” he said.

“Given the economic situation with pandemic unemployment, all the retailers are quite correctly focusing on value.”

Source:https://www.irishtimes.com/news/ireland/irish-news/paying-15c-more-for-a-loaf-after-brexit-irish-bakeries-eye-flour-beyond-britain-1.4436528