Brexit - hard cheese for local food firms?

By John Campbell
BBC News NI Economics & Business Editor

  • Published
East Coast Bakehouse
Image caption,
Managing director of East Coast Bakehouse Michael Carey said Brexit came as an "absolute shock"

Just off the motorway, 40 minutes north of Dublin, you'll find the East Coast Bakehouse - probably the most modern biscuit factory in Europe.

It started trading in June 2016 - coinciding almost exactly with the UK's vote to leave the EU.

The outcome has had a major impact on the company's export strategy.

"It was absolute shock. We woke up that morning and realised we would have to change our entire business plan," said managing director Michael Carey.

Image caption,
The East Coast Bakehouse started trading in June 2016

The original plan was to focus almost entirely on the UK, the biggest market for most Irish food exporters.

But the potential of disruption to Anglo-Irish trade through tariffs or regulatory barriers suddenly made that safe option too risky.

"We have taken steps to widen the footprint of our exports far, far faster than we ever intended to.

"We're currently exporting to 12 countries outside the UK and Ireland and by the end of this year we anticipate we'll be in 20 countries.

Image caption,
The original plan was to focus almost entirely on the UK but that option became risky

"In our original business plan we had no intention at all of doing that in the first three or four years."

'Brexit Barometer'

Further steps taken to reduce the Brexit risk include focusing on higher value products for the UK market and refocusing on the domestic Irish market.

Other Irish food businesses have had to go through a similar process.

The industry body Bord Bia produced the 'Brexit Barometer', a risk-analysis tool designed to help companies assess their supply chains, routes to market and customs experience.

That exercise identified exporters with short shelf-life products as those most at risk.

Mushroom exporters and producers of chilled meat would face a particular challenge if new barriers to trade cause any delays to shipments.

'Hard Irish cheese'

As Bord Bia explained: "UK-based customers enforce acceptable minimum life (AML) criteria on their suppliers which, if not met, will result in the rejection of deliveries at their distribution centres."

Another area of worry is what a hard Brexit would mean for hard Irish cheese.

Almost 80,000 tonnes of Irish cheddar is exported to the UK every year. In a no-deal situation tariffs of 1,671 euro (£1,475) per tonne would apply to those exports.

Image source, Getty Images
Image caption,
Finding a solution for the Irish border is a major sticking pointing in the Brexit talks

Cheddar is not widely eaten elsewhere in Europe so it would be a struggle for exporters to find new customers - or, as Bord Bia puts it, "identifying alternative markets of scale for cheddar is a key concern".

Analysis commissioned by the Irish government and carried out by the consultancy Copenhagen Economics, identified the dairy sector as potentially the most vulnerable in the event of a hard Brexit.

It suggested that if World Trade Organisation (WTO) tariffs are imposed, then by 2030 Ireland's dairy exports to the UK would by 76% lower compared to a no-Brexit scenario.

However, this analysis assumes "no policy change" - i.e. before any mitigating actions are taken by the Irish Government.

Michael Carey remains hopeful that something very close to the current trading arrangements can be maintained after Brexit.

But he points to the continuing uncertainty about the final outcome as something which is already damaging for businesses on both sides of the Irish Sea.

"The uncertainty doesn't allow retailers and suppliers to build new relationships. It doesn't allow new products to be developed. There are opportunities already being missed."