Monday, 25 January 2021Food Drink Ireland (FDI), the Ibec group representing the food and drink sector, has expressed concern about the impact of Rules of Origin in the EU-UK Trade and Cooperation Agreement (TCA) on the Irish bakery sector which will result in tariffs being applied to flour imports and increased costs for the sector. FDI has called for a derogation for the Irish bakery sector in order to avoid these tariffs.
FDI Director Paul Kelly said: “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% for grain from other countries such as Canada or USA. If the wheat used to make flour is more than 15% of 3rd country origin, the full tariff of €172 per tonne becomes payable. This is a significant problem for the Irish Bakery industry, which purchases flour from millers in Great Britain (GB) with a high proportion of 3rd country wheat, mainly Canadian or US which is rarely below the 15% tolerance level.
“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. 80% of the flour used in the baking sector is imported, mainly from GB and the product specifications for much of that requires a higher percentage of US/Canadian wheat than allowed for in the tolerance rule.
“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.
The implications of this for the bakery industry are very serious:
- · By exceeding the tolerance, the full tariff of €172 per tonne will apply to flour imported from Great Britain. This is equivalent to a 50% increase in product cost.
· Based on ERSI projections, this would equate to a 9% consumer price increase in bread.
· The tariffs will have significant negative impact on the competitiveness of Irish based producers of breads and bakery products both on their domestic and export markets.