THE COST OF bread in Ireland could be about to rise by at least 9% due to a combination of factors – including Brexit making flour more expensive to import from the UK.
Bakers are concerned about how Ireland will source the huge amount of flour needed for its bakeries which, up until now, has been imported from the UK as there are no mills in Ireland that produce industrial flour.
There is just one Irish flour mill, in Portarlington, Co Laois, which is run by Odlums and which produces ‘retail’ flour, or packets of flour, for consumers.
It’s not possible to simply switch to importing industrial flour from the EU, because Ireland and the UK are the only countries to use the type of flour to make sliced pans.
“Our difficulty is the flour we use in bread is different to continental Europe, there are higher levels of protein in our flour,” Senator Malcolm Byrne told TheJournal.ie.
“And it’s unlikely that Irish tastes will change from the sliced pan to croissants or a baguette… I can’t see people eating a crisp baguette instead of a crisp sandwich.”
Senator Byrne, along with TDs Paul McAuliffe and Joe Flaherty, raised the issue at the Fianna Fáil parliamentary party meeting this week, where Byrne said the Taoiseach was “very much aware” of the concerns and challenges Brexit posed for the cost of bread.
Why exactly is the price increasing?
The increase in cost is due to ‘rule of origin’ standards contained in the trade agreement struck by the EU and the UK before Christmas, resulting in more strict rules and some tariffs, or trade taxes, for products being imported from the UK.
Around 80% of all flour used for making bread in Ireland is imported from UK mills.
UK factories use wheat imported from Canada and the US to make the flour that Irish bakeries use.
Because this makes up more than 15% of flour made in UK mills, and because the flour is now also processed in a third country (the UK), tariffs will apply to importing it into Ireland.
The new Brexit-related tariff means €172 must be paid per metric tonne of flour being imported from the UK, which will most likely mean increased costs for Irish consumers.
Although the EU-UK trade agreement is already in force, the price of bread may not yet have increased as producers are likely to have stockpiled ahead of Brexit changes coming into force from 1 January.
‘The perfect storm’
Gerald Cunningham, secretary of the Flour Confectioners and Bakers Association, told TheJournal.ie that a number of other factors have lead to “the perfect storm” that could make bread between 10-15% more expensive.
Along with Brexit-related costs, there are also increases in costs for other ingredients used to make bread, such as yeast, oils, and sugars, as well as an increased cost in labour.
“Bakeries are not a high-profit industry, it’s marginal profits that they make,” said Cunningham.
“Manufacturers can’t absorb extra costs because most are already operating at a 40% discount. If a loaf of bread is put on a shelf at the cost of €1, 40c goes to the retailer, and 60c goes to the producer. So that goes to pay for labour, packaging, ingredients, insurance, etc. So any increases has to be passed on, or it’s going to close bakeries.”
Senator Malcolm Byrne is calling for a derogation on flour, to help keep costs down for consumers and keep bakeries open.
He suggested that some of the EU Brexit Fund could be used to subsidise bakeries in the short-term.
He admitted that both these suggestions are short-term measures, and that the longer term result may be that Ireland begins to import more flour from continental Europe and tastes begin to change, though he said that this is unlikely.
Another option is that an industrial mill is opened in Ireland, Byrne said.
“There are a number of factors here. There’s the cost of bread feeding into the Consumer Price index and inflation, the security of food supply, and environmental reasons – the more goods we can produce closer to home, the better.
“The challenge is that we need to diversify into other products, if we can. Derogation or the EU Brexit Fund are only short-term solutions, we need a sustainable [option].”
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