Thursday, 2 May 2024

Supply of perishable imports likely to come under strain in no-deal Brexit

Brexit has already been hugely disruptive and it hasn’t even happened yet. Irish exporters with exposure to sterling have had to adjust to the British currency’s new level, with the positive aspects of diversification into other markets now more apparent than ever.

However, if a no-deal scenario does transpire, the turbulence of the last two years will be soon forgotten.

From a business point of view our food exporters are seen as especially vulnerable, particularly mushroom producers who make a short-shelf-life product that can’t really be sold any further afield than Britain.

But for ordinary consumers it’s perhaps in our food imports that a no-deal Brexit will touch everyday life most keenly, initially at least. A stark Central Bank report last week, which warned that consumer goods could be less readily available, highlighted the problem.

Many of our favourite products come into Ireland from Britain. They might be goods that are manufactured in Britain itself, or goods that have come via the so-called ‘landbridge’ – the term used to describe the freight transport route that begins on continental Europe, crosses to Britain, and then crosses the island itself for products to be dispatched to outlets in Ireland.

A new trade regime in the context of a no-deal has the potential to disrupt this supply channel hugely. Any new tariffs will make British goods more expensive here, although this might be offset to some extent by depreciation in sterling.

Edgar Morgenroth, professor of economics at DCU Business School who has studied this issue, says there are certain items that we get “exclusively, or more-or-less exclusively from the UK.”

“Some of the areas where we know we import a lot are the likes of cereals, breads, biscuits… that’s because we have tastes for certain brands,” Prof Morgenroth told the Irish Independent. “These may, depending on what they are, be subject to tariffs and potentially subject to delays especially in the few days, or possibly weeks, following a no-deal exit.”

The problems are more acute when it comes perishable products. Delays at ports caused by customs bureaucracy would mean products would be less fresh by the time they get onto our shelves.

Some perishable imports will be unaffected, says Aidan Flynn, general manager of the Freight Transport Association of Ireland (FTAI). That’s because they come directly to Ireland via Cherbourg in north-west France, and don’t have to pass through Britain.

“With Cherbourg you’re talking about fruit and vegetables from Spain and so on, peppers etc. That’s unaffected because you have those routes there already,” Mr Flynn said.

Where the squeeze will really come is on perishable products imported via the landbridge.

“A lot of chicken is imported and pork… a lot of the same products we’re shipping out we’re actually bringing back in [over the landbridge],” Mr Flynn said.

Prof Morgenroth agrees, also citing cheese and some types of fish as being potentially affected.

One might ask why hauliers simply don’t bypass the landbridge and instead come round Britain directly to Ireland by sea. The answer is that it takes twice as long – roughly 40 hours versus 20 hours.

What, then, are the authorities doing to try and keep the show on the road? Tanaiste Simon Coveney sought to downplay the Central Bank report last week, saying that although the cost of imported food could go up, he didn’t think there would be shortages.

Key to making sure that Mr Coveney’s predictions come true will be Revenue, which is responsible for enforcing customs arrangements on this island. It says its overriding goal is to “facilitate the efficient and timely movement of legitimate trade”.

“We work on the basis of a presumption of honesty and that businesses want to be voluntarily compliant and minimise the level of interaction with us,” Revenue told the Irish Independent, perhaps indicating a willingness to be as hands-off as possible when it comes to any checks that have to be carried out on goods coming in here.

Revenue said it has been engaging with companies, freight businesses and others so that everyone is aware of what might be coming down the track post-Brexit, and can be prepared in such a way as to make things as easy and fast as possible.

The Department of Agriculture and Food is singing from a similar hymn sheet, saying it is participating in planning for a no-deal Brexit and wants to carry out any required import controls on agri- food products “as efficiently as possible, while also ensuring the minimum possible disruption to trading arrangements.”

The Department of Business said Minister Heather Humphreys is talking to the grocery sector to try and help them get ready for a disruptive Brexit.

But helping people get ready and trying to make things as easy and fast as possible does not necessarily mean the status quo. Any changes to the trading regime will have a negative knock-on effect for supplies here, and that’s why the best hope looks like finding a deal that will keep our customs arrangements just as they are.

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