Ireland needs to look at encouraging companies to invest in flour mills here to avoid a permanent rise in bread costs post-Brexit, the head of Enterprise Ireland has said.
EU Brexit adjustment funds could be used to fund new infrastructure.
Ireland imports around 90pc of its flour from the UK, according to Bord Bia, but some of that flour contains 45pc Canadian wheat.
The milled flour is being hit with tariffs following the EU-UK trade deal because the high mix of Canadian wheat as well as British grains fall foul of the ‘rules of origin’ clause in the deal.
Julie Sinnamon, the outgoing head of Enterprise Ireland, told a Seanad committee on Monday that the government should look into “the feasibility of doing further processing in Ireland”.
“The rules of origin impact on flour has been an unintended consequence and with that might come opportunities,” she said
“With that change - and the lack of competitiveness that that brings in terms of the cost - I think there’s probably piece of work to be done in terms of looking specifically at the issue and supporting companies to look at the feasibility of doing further processing in Ireland, which previously would have been done elsewhere.”
Complex ‘rules of origin’ limits in the trade deal allow a maximum of 15pc of grain from outside the EU or UK, with amounts over the threshold incurring a tariff of €172 per tonne.
Food Drink Ireland, an Ibec group representing the industry, estimates the tariffs will push up production costs by 50pc and force bread prices up by 9pc, making Irish products more expensive than those produced in the UK or the EU.
The government has asked the EU to consider “flexibilities” to eliminate or suspend the tariff, but the appeal is likely to fall on deaf ears.
“These rules of origin have to be followed,” said Rowena Dwyer, Enterprise Ireland’s policy and planning manager.
But she said the EU’s €5bn Brexit fund - out of which Ireland is entitled to around €1bn - could be used to fund a potential transition to Irish milling.
“It probably is [about] looking at the Brexit adjustment reserve fund, potentially, and seeing what scope is there within that to support companies to make investments, whether they are capital or current investments.
“That is definitely the objective of the Brexit adjustment reserve fund, and I know it’s the objective at a broad ‘whole government’ level to utilise it and to, I suppose, see what flexibilities might be available to make those type of investments.”
But Co. Kildare grain farmer Adam Goodwin said the few Irish mills that still exist are not buying home-grown wheat, largely because it’s cheaper and easier to import it from abroad.
“It’s just absurd, where we’ve had a lack of bread in supermarkets, with lockdown and everything else, that we’re not milling our own grain.”