Grain producers and processors in the United Kingdom and European Union received a last-minute Christmas gift when the UK and EU agreed to a trade deal on Dec. 24, just days before Brexit (Britain’s official exit from the EU) was scheduled to go into effect.
The agreement was a welcome development for the EU and UK, which have been among the hardest hit by the nearly year-long COVID-19 pandemic. While this part of the world has endured far worse disasters — the Bubonic Plague of the late 1300s and World War I and II in the first half of the 20th century come to mind — this current pandemic coupled with a no-deal Brexit would have further crippled a regional economy that already is depressed, mostly due to lockdown measures enacted to slow the spread of the virus, which as of mid-January had killed more than 2 million people worldwide.
Without a trade deal, UK grain producers and flour millers would have been effectively cut off from their biggest export market due to high tariffs.
The deal will enable British farm products such as wheat and barley to remain competitive in the EU, the destination for more than 60% of the UK’s agricultural exports.
A no-deal Brexit would have seriously damaged the UK’s flour milling sector, with more than 600,000 tonnes of flour exports (15% of its total production) subject to tariffs of up to 50%. Losing this trade would have meant job losses and threatened the closure of some mills, according to Alex Waugh, director general of UK Flour Millers, formerly known as the National Association of British and Irish Flour Millers (nabim).
Ireland, which is a member of the EU (Northern Ireland is part of the UK), had started stockpiling flour and sourcing alternative supplies from Europe in case an agreement wasn’t reached. It was estimated that in a no-deal Brexit, the price of a loaf of bread in Ireland would have risen by up to 15 cents per loaf.
It’s not a perfect deal by any stretch of the imagination, particularly for the Irish baking sector, which is facing difficulties as flour imports from the UK, necessary because of the shortage of domestic milling capacity, will in some cases now attract tariffs of up to 50%. The reason for this is the flour used for much of the bread baked in Ireland is shipped from the UK but includes Canadian wheat, which means that it is subject to non-EU tariffs.
There’s also the reality that despite the deal, consumers of various products will face higher prices and possibly some shortages for a period as supply chains are rebuilt and new customs requirements established.
Still, the two sides deserve credit for finding at least some common ground in a world that seems to have lost the ability to execute the give-and-take art of compromise. One must look no further than the US government to see the dysfunction that results from two sides adamantly refusing to accept anything but absolute victory.