Food & Drink Ireland: ‘Brexit border will add ‘huge costs’ to food’

15-May-2017 - Last updated on 16-May-2017 at 13:41 GMT

The European Union chief Brexit negotiator Michel Barnier recently reassured Ireland that the EU will fight to ensure there is no return to the a hard border with Northern Ireland after the UK leaves the EU. ©iStock/FotoKOT

Food and Drink Ireland says Brexit hard border between Ireland and Northern Ireland would add “huge costs” to food businesses and suggests Sweden and Norway border may be solution.

The Irish food and drinks industry has outlined its concerns that a Brexit hard border between Ireland and Northern Ireland will have on the Irish food industry, as it warns over possible further currency volatility that will impact the food industry.

But Barnier suggested that keeping the border free of all controls could prove problematic, pointing out that “customs controls are part of EU border management. They protect the single market. They protect our food safety and our standards.”

Ireland shares a land border with the UK, which is set to leave the customs union and EU single market once it is fully extricated from the EU.

Speaking to FoodNavigator Paul Kelly, director, Food Drink Ireland, said: “An actual hard border would have a detrimental effect because it would significantly impede the free flow of both finished goods and intermediate ingredients.

“It would add a huge cost to businesses both in the Republic of Ireland and Northern Ireland that would be very difficult to recover in the market place.”

The trade body is hoping for “as limited a border as possible” between Northern Ireland and Ireland, which share integrated food distribution and production businesses.

British and Irish government say no to hard border

The British and Irish governments have both said they do not want a return to customs posts on the border.

Kelly pointed to the example of the border between EU member Sweden and non-member Norway, where trade routes had been maintained despite the EU border separating them, as a blueprint of what was possible to maintain trade flowing.

Trading between the two countries is helped by electronic customs systems.

“It is vitally important for everybody both Irish and other European food businesses as well as UK food business that we have a transitional period of sufficient duration to allow businesses to adapt,” Kelly told us.

Food and Drink Ireland has previous warned that thousands of jobs were at risk in Ireland’s food and drink sector if the government failed to introduce measures to mitigate the impact of the UK’s vote to leave the EU.

A significant number of the 600 food companies in Ireland have exposure to the UK, through exporting meat and dairy to the UK.

Last year, it was reported that a number of Irish mushroom growing farms were closing amid a steep decline in the value of sterling against the euro.

“There have been an amount of job losses. Luckily, for the time being sterling has strengthened somewhat,” Kelly told us.

But he warned of the potential for further currency volatility ahead, following the triggering of Article 50.

Proactive approach to fair trading

Separately, the trade body has called for a proactive approach to fair trading, one year after the Grocery Goods Regulations was introduced to try and rectify imbalance in the market between the big grocery retailers and suppliers.

Kelly added: “Unfair practices faced by food suppliers that impact their costs are not only bad for business and individual suppliers, but ultimately they are also bad for consumers.

“The new Grocery Goods Regulations, which came into effect one year ago, aimed to address these issues and the unfair demands being put on suppliers. These include a failure to respect contractual terms, de-listing threats and off-invoice deductions without sound business reasons.

“Suppliers need to have certainty in respect of the risks and costs of trading, a key principle enshrined in the legislation that established the Grocery Goods Regulations.

“Consumers are best served by a grocery market that is both fair and competitive, one that offers choice and convenience, and provides an outlet for new products and suppliers.

"The regulations have already made significant inroads to addressing some of these pressures and demands on suppliers. The Competition and Consumer Protection Commission must be a strong voice on these issues and ensure the spirit of the regulations is adhered to.”