Farm Ireland

Wednesday 26 October 2016

Brexit gives artisan sector food for thought

Producers are worried currency parity will hurt their businesses

Ken Whelan

Published 10/08/2016 | 02:30

Ralph Haslam exports two tonnes of Mossfield cheese to Britain every year
Ralph Haslam exports two tonnes of Mossfield cheese to Britain every year
Seamus Sheridan currently exports 30pc of his cheese crackers to British stores

There is mounting concern within the artisan food sector that any parity between sterling and the euro during the upcoming Brexit negotiations will have harsh consequences for the thriving Irish food producing sector.

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Producers say that currency parity up to and after Britain's exit from the EU will squeeze margins within a sector which has increased the export of artisan food over the past decade, particularly to Northern Ireland and Britain.

Glennys Pollock, who heads up the Pollocks Pickles & Preserves company in Co Monaghan - which exports some 30pc of its product to Britain - says the Brexit move is a source of "great worry" to the company.

"It is a pity [Brexit] has happened. We have great relations with our Northern and British customers. Our biggest worry is that sterling and the euro will reach parity, and if that happens, we are in deep trouble", she told the Farming Independent this week.

"We will have to wait and see and probably rethink our export destinations," she added.

Glennys is worried that the fact that Britain will not be a member of the European Union at the end of the process will lead to a lot of paperwork.

"This is going to lead to a huge amount of paperwork. We had a big order from Kuwait a few years ago and because it was a non EU country we were overloaded with paperwork to get the produce to the country," she pointed out.

Seamus Sheridan, whose company produces brown bread cheese crackers mainly for the export market, is equally concerned about the possibility of currency parity.

Some 30pc of the crackers go to high-end British independent stores at the moment, though the company has other substantial markets in the US and Europe.

The artisan food maker and agriculture spokesman for the Green Party says artisan producers are "more than worried" about the Brexit development.

"Brexit is causing problems for the sector and if the euro and sterling reach parity, it will be under fierce pressure.

"Things are not great at the moment, but we will have to wait to see the orders which the British supermarkets send out to artisan food companies at Christmas to know where we are", he added.

The Irish artisan cheese market, which has been to the forefront of the export drive in the artisan sector, is also worried about possible currency problems.

Ralph Haslam of the award-winning Mossfield cheese brand in Birr, Co Offaly exports two tonnes of his product to Britain annually, and he says any currency parity would affect his operation.

"Mossfield is a niche upmarket brand and our British customers, who live mainly in London's Chelsea area, will continue to buy the cheese because they like it. But currency fluctuations will have an effect", he said.

Cheese producer John Hempentall in Wicklow, ironically, maybe be about to re-enter the British market at a time of high market volatility.

He left the British market some years ago, mainly because of its "cut-throat" cheap food policies, and concentrated on the domestic, EU and US markets.

Now he has been invited to sample his award-winning Wicklow Brie brand once more by the giant Paxton and Whitfield distributor in England.

"We supplied Sainsbury's and Waitrose when we were last in the British market, but left because of the country's cheap food policy. We will give it another try in September, but a 10pc to 12pc margin drop because of currency fluctuations would affect that decision.

"Even for the industrial cheeses, it would not be economical if things get to parity, much less for the artisan ones," he added.

Some 150 Bord Bia accredited artisan companies export between 10pc and 40pc of their product to retail multiples and independent food stores in Britain, and this trade runs into the tens of millions of euro every year.

It is projected that artisan products such as cheeses, yoghurts, organic meats, smoked fish, chocolates, craft beers and coffee creams, to name just a few, will rise by a further 15pc between now and 2021.

Bord Bia defines an artisan or small agri-business venture as a company with an annual turnover of between €100, 000 and €3.5m.

The state organisation says it is monitoring the situation in the run-up to the triggering of Brexit from its London office, and is keeping the artisan and small agri-firms community informed of developments on a weekly basis through its food alert online facility.

"The artisan food-producing sector has thrived over the past decade and the North and Britain remain our markets for these companies, as consumer taste on both islands is generally the same", Stephanie Moe, Bord Bia artisan food adviser, outlined this week.

"So far our London office has not reported any increase in companies referring new market concerns to them, but they are keeping the whole Brexit situation under daily review", she added.

She also said that many of these artisan companies were exporting to the United States and Europe, and that these markets could be further developed as the British exit from Europe gathers pace.

Conferences on Brexit implications

Two conferences on the implications of Brexit are scheduled to take place this month - at the Taste of Cavan festival this weekend, and at a Bord Bia arranged conference at the BrookLodge hotel in Wicklow at the end of the month.

Alo Moran, the chairman of the Cavan conference, says there are real concerns in the border region about the possibility of a "hard border" being reintroduced, "with all the security and community instability which that will involve".

There is also continuing worry within the artisan and small agri-business sector about the problems caused by the fluctuations in sterling.

This weekend's conference will be addressed by the vice chairman of the EU parliament, Mairead McGuinness (FG), Independent MEP Marian Harkin, former agriculture minister Brendan Smith (FF), and farmer leaders Joe Healy of the IFA, Charles Bourns of the European-wide COPA farmers' pressure group, and Gary Ford of the UK Farmers Union. Among the issues likely to be highlighted at the Cavan conference on Friday are:

With sterling on a downward trend, how will artisan and small agri companies be given concessions or compensation for trading with Britain?

How will the eventual EU exit of Britain affect Irish agri business in terms of tariffs and new British trade deals?

What is likely to occur when the issue of food labelling is addressed in the Brexit negotiations?

Will there be a hard border, and what controls will there be on people and foods travelling north and south?

What controls will there be in terms of goods and services from a VAT perspective?

What regime will be introduced on disease control and animals travelling, and on the transportation of animal by-products?

On purely commercial ­­in-house operational matters, the conference is also likely to discuss the implications of Brexit on banking and transaction fees, insurance, communications and energy issues, and how the investment in the border regions arising from the peace process will be affected by Brexit.

Similar discussions are expected to take place at the Bord Bia conference in Wicklow later this month.

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