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HOW WOULD BREXIT affect Irish fridges, shelves, and shops?
We’re just three weeks out from the 29 March, the date by which the UK is due to leave the European Union, and a no-deal Brexit seems more likely than ever. Although companies are steering clear of speculation, there is a fear about what exists now as a free-flowing and open market could shudder to a halt, at least briefly, because of Brexit.
Ireland, of course, has a close business and trading relationship with the UK, which means Brexit, particularly the uncertainty that it’s brought, has threatened it.
Of particular significance are the Irish businesses that export to the UK, and rely on that UK market to a significant degree: if that market is closed off to them, or becomes less lucrative to export to, then that could threaten businesses to the point of collapse. This means that some foods produced and distributed inside Ireland could be at risk.
So what foods should we be worried about? In short, fresh produce – like agrifoods, fruit and vegetables – that Ireland imports through the UK. This could mean that there is a short period immediately after a no-deal Brexit where these foods could be in short supply.
Ireland also imports quite a bit of confectionery and baked goods from the UK, but because this is preservable it shouldn’t be a problem to source post a no-deal Brexit in the long run – although it could become more expensive.
The UK landbridge
The UK landbridge consists of the roads and ports Irish trucks use to get products to the EU, and vice versa. Around 150,000 Irish trucks use the landbridge a year; two-thirds of Irish goods exporters make use of the UK landbridge to access continental markets.
A further 53% of Irish goods exports (measured in volume) to all countries other than the UK are transported via the UK.
Meats and other ‘perishables’ are massively reliant on the UK landbridge. Although it’s more expensive than circumventing it, it’s also much faster: it takes less than 20 hours from Ireland through Great Britain to the EU, according to a report by the Irish Maritime Development Office (Nov 2018).
Dublin to France would double to 40 hours for direct roll-on, roll-off services. And if there are delays, it will affect the food we import and export.
If there are checks at Dover-Calais, and they take 80 seconds to carry out, that means the tailback of trucks will be “unrecoverable” – if they take 40 seconds, then there will be no change to the free-flowing system we have currently.
But Irish hauliers have said that it’s “unreasonable” to expect that no-deal Brexit checks would take just 40 seconds.
Tariffs
If there’s a no-deal Brexit, it will mean a number of products could be hit by tariffs, which is a tax imposed on goods or services from other countries in order to favour home industries.
Ireland’s biggest exports, beef and cheese, are at particular risk (of the 90% of Irish beef that is exported, 47% goes to the UK, and 87% of Irish cheddar cheese is exported to the UK).
The expectation is that the UK’s trading relationship with other countries would revert to World Trade Organisation (WTO) rules – meaning a set standard of tariffs (though they would have to apply to join).
The items that carry the highest import tariff rates under WTO rules are meat (49%), cereals (45%), sugars and confectionery (42%), and dairy products (31%). Here’s a list of the tariffs by commodity, meaning the extra cost of importing:
For bread, 95% of all flour used actually comes from the UK, so importing that would carry tariffs in a no-deal Brexit. Breadmakers have warned that if there is no deal, tariffs could result in prices increasing by between 10% and 15%, as breadmakers would be paying €172 extra per tonne of flour they import.
Gerald Cunningham, president of the Flour Confectioners and Bakers Association, told TheJournal.ie this when asked if it would mean there would be a shortage of bread: “I’d like to think that the shelves will be full, we don’t want to panic and put more pressure on bread-making businesses.
The main point is that ports need to stay open and free-flowing, the same with the borders.
The all-island economy
Flour, cheese and the meat industries are all based on north-south cooperation.
“Every year 400,000 lambs go South, and 400,000 pigs meet them and go North,” Irish Farmers’ Association president Joe Healy said at its AGM this year, adding that the organisation’s support was for the backstop to remain.
A UK committee was told that farmers in the North were so worried about the Republic of Ireland being closed off to them because of Brexit that they had considered breeding less lambs for this season.
If farmers in the North can’t send lambs down here, because of checks or because it just doesn’t make financial sense for them anymore, there could be a surplus in the North:
“We can’t eat our way out of the problem”, as one representative told TheJournal.ie.
Guinness is also another all-island-of-Ireland product: although it’s brewed at St James’ Gate, it’s then transported up to Belfast where it’s packaged, and some of it is then brought back down to Dublin for export.
Diageo told a UK Business committee that 18,000 of its trucks cross that border a year, “so even small hold-ups to process those truck movements would be really unwelcome”, it also stated in an annual report that it has no intention to change its supply chain because of Brexit.
In 2017, Ireland imported over 72,000 tonnes of potatoes, 62,000 tonnes of cheese, 72,000 tonnes of fish and shellfish and almost 70 million litres of water.
Almost 10,000 tonnes of tea and over 21,000 tonnes of coffee were imported in 2017.
Most of these are non-perishable goods, so if there is a delay, it’s reasonable to assume that the supply chain will catch up with itself eventually.
Shane Hamill of Bord Bia said that companies are going to try to offset costs as best they can.
“You’ll see a lot of companies reformulating their products, shifting their ingredients in order to manage any cost increases.
You might also see rounded pricing – food going for €1 instead of 97 cent.
Fish would also become more expensive. A Netherlands report on fishing in the EU says that if the United Kingdom “completely closed its marine areas, the UK, Ireland, the Netherlands and Belgium would be affected the most”.
“The most visible impact of Brexit on fish consumption would be expected in Ireland (more than 4% decline), followed by UK. The change in consumption is directly linked to the changes in consumer prices… The strongest increase of fish prices occurs in Ireland, where consumer prices of fish products would grow by more than 9%.
The reason for such a high price reaction is the large dependence on trade in the fish processing sector. In Ireland, about 80% of consumption is sourced by imports out of which 70% comes from Europe, leading to a high sensitivity of consumer prices on trade changes.
Fish production would also decrease, according to the same report.
An interesting note on potatoes and potato seeds: Michael Creed, the Minster for Agriculture, Food and the Marine told the Dáil that seed potatoes are banned from entering the EU from third countries.
Traders have been forewarned about this, he said, and all advice to Irish growers is to ensure that UK seed is supplied before the end of March in order to facilitate the 2019 planting season.
“There will then be at least another 9 months before the 2020 planting season for the European Commission to consider requests from the UK for amendment to Annex III of the Plant Health directive based on a detailed scientific justification as to why the amendment is warranted,” he said – so they’re putting that off for later.
A good by-product of Brexit, however, is that it may get people thinking about how they get their food so cheaply and so quickly.
“I think people are starting to pay a little bit more attention to what is on their shelves,” Shane Hamill says, “so there’s certainly a new appreciation not only for how the food arrives and how quickly it takes, but also where it’s coming from and that’s probably a good thing.”
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