![Heidi Steffen of Iona Health Food Shop in Holywood, Co Down: ‘Now every item [from Britain] needs a customs declaration.’ Photograph: Colm Lenaghan/Pacemaker](https://www.irishtimes.com/resizer/v2/5JTVEAKCT4QKOHPLVEREBVXNXE.jpg?auth=ff30fa61a626f72f7c9b6763915726e648ff51b07abcc4fa4c4faabc601f893e&smart=true&width=1024&height=576)
Heidi Steffen has run the Iona health shop in Holywood, Co Down for 35 years but has experienced some of the biggest changes in her business in the past six months. It is all down to Brexit.
"I am avoiding England – it doesn't work for me any more," she said.
For three decades, the benefits of the UK being in the EU single market and customs union meant that Steffen, who moved from Switzerland to Northern Ireland in 1972, could import two pallets of products every week from two companies in Britain with minimal fuss or paperwork.
Almost six months after Brexit came into effect on January 1st – and five years on from the UK voting to leave the European Union – the reality of the changes in trade have begun to bite.
The new bureaucratic curtain that has fallen around Britain means EU-UK trade is no longer frictionless. Despite a EU-UK trade deal and the Northern Ireland Protocol to avoid a hard border on the island of Ireland, businesses have had to make changes to avoid post-Brexit red tape from new customs paperwork and border controls and restructure their supply chains.
Now every item needs a customs declaration
"For 35 years I had weekly pallets arriving from two companies, one in Scotland and one in England. I had 260 items coming in between food, cosmetics and candles – lots of different items. Now every item needs a customs declaration and both companies were not willing to deal with Northern Ireland any more," said Steffen.
A sea of red tape has been created for Northern Irish businesses. In the first 123 days of Brexit, businesses had to deal with more than 500 checks a day on goods imported from Britain.
Steffen has had to source alternative supplies in Northern Ireland and south of the Border. A wholesaler in Belfast is supplying herbal medicines and vitamin products; it has had to employ an extra person just to deal with customs declarations on their imports. She sources products from a health-food wholesaler in Cork, some of which are sourced from elsewhere in the EU.
“What is really funny now is that I suddenly have items on my shelves and the biggest writing on the label is Dutch. They probably get it straight from Holland,” she said.
Businesses have been forced to adapt quickly in the months since Brexit as they must find ways of circumnavigating Brexit and the changes it has brought.
These changes are borne out in the broader economic statistics.
Since Brexit, north-south trade on the island of Ireland has increased where east-west trade has declined on imports from Britain into the Republic, with fewer goods crossing the Irish Sea into the State due to pre-Brexit stockpiling and new border checks and controls.
Central Statistics Office figures for the first four months of 2021 show that imports from Britain declined by 39 per cent on the same period last year, while exports to Northern Ireland have risen 40 per cent and imports from the North increased by 61 per cent.
"This shows that barriers from Brexit, as small as they may be in the scheme of things, have impacted on trade," said Edgar Morgenroth, professor of economics at Dublin City University.
Statisticians, economists and business groups caution against reading a full “Brexit effect” into these figures, pointing to the disruption to international supply chains and shipping lines as a consequence of the Covid-19 pandemic. But they accept there are trends emerging.
"To some degree, what we are witnessing in the North is quite a bit of import substitution going on where Great Britain suppliers to Northern Ireland are being ditched for local supply," said Stephen Kelly, chief executive of the business representative group Manufacturing NI.
“In an effort to remove some of that friction and cost – and to ensure continuity of supply – Irish customers are buying from Northern Ireland in increasing amounts. It is not unexpected.”
All-island supply chain
While increases in north-south trade offsets losses on volume on the east-west route, trade with Britain – the world’s sixth largest economy – remains four to five times larger.
Paul Kelly, director of Food Drink Ireland, a division of business representative group Ibec, said that the increase in north-south trade reflects "the importance and the flexibility of the all-island supply chain that has been able to adapt pretty quickly."
The first six months of trade under Brexit is affecting businesses in many different ways. Pádraig Tully, managing director of major plant wholesaler Tully Nurseries in north Co Dublin, said the company was trying to encourage a key plant supplier in England to continue supplying the Irish market despite the new post-Brexit burden of filling out phytosanitary certificates for deliveries to garden centres ordering a small number of plants.
“He has been trying to encourage me to help him find an Irish-based intermediary to help him act as an agent so he can route all his stock to one person in Ireland,” he said.
“I am trying to encourage him to set up a company in Ireland. He is reluctant because he is so busy in the UK because his home market is booming because of Covid.”
Finding alternative plant suppliers in Europe is "easier said than done" because many European growers are already sold out due to high demand during the pandemic, he said.
Meanwhile, Tully describes as “bizarre” the fact that National Trust gardens and parks in Northern Ireland, which traditionally buy plants and flowers from Britain, are looking south of the Border for stock when “they would have never bought from the Republic of Ireland”.
“British nurseries are reluctant to supply Northern Ireland because of the red tape. It is a very strange collection of events all happening at the one time,” he said.
The first shock was imports into Ireland. The next shock that is going to come is on exports from Ireland to Britain
Britain remains a key export market for Ireland. Exports rose 7 per cent to €4 billion in the first four months. Any Brexit effect on exports will not be felt until after October 1st when the UK starts applying border checks on in-bound EU goods, nine months after EU checks began on imports from Britain.
"The first shock was imports into Ireland. The next shock that is going to come is on exports from Ireland to Britain," said Hazel Sheridan, the Department of Agriculture's head of import controls division who oversaw the new Brexit controls on food, plant and live animal imports.
Some businesses are already feeling a chill economic wind in that direction.
‘Unique situation’
Brian Hanly, the fourth generation of his family to run the John Hanly & Co woollen mill in Nenagh, Co Tipperary, said that sales of his company's scarves and blankets in the UK have already halved, though that is also partly down to the pandemic. He says smaller UK customers cannot handle the Brexit-related shipment costs and duties and have stopped buying from him.
“It is nearly gone to a stage now where I have to think when did we last get an order from the UK. It used to be a daily or weekly occurrence,” he said.
On the production side, Hanly has navigated the logistical challenges of sending his woollen products to a Scottish textile “finishing” company, but it has increased his costs by up to 10 per cent, while his transport companies avoid Northern Ireland in favour of England as a transit route back to Co Tipperary because it is a “basket case” managing the new red tape.
“It is a pain in the ass,” he said of Brexit. “It should never have happened. It has cost us business for sure. It is hard now to even contemplate how you keep selling to the UK.”
Other businesses are side-stepping Britain and re-engineering supply chains to export directly to Ireland, dropping Britain as the traditional distribution hub for Ireland. CSO statistics show imports from the EU increased by 7 per cent in the first four months of the year.
Conor Whelan, managing director of Dublin-based distributor Stafford Lynch, has agreed deals with food brands John West and Epicure to ship products directly into Dublin Port from European and international manufacturers instead of distributing into Ireland through Britain.
“Our business is a perfect microcosm of what’s happening as a result of Covid and the Brexit impact on supply chains. Moving to alternative, direct EU sourcing has cut out the UK,” he said.
Whelan conceded that re-engineering supply chains did not make economic sense for some products so companies must simply bear the tariffs imposed under rules of origin where a tariff is applied even if a product is distributed from EU state to EU state through the UK.
“We are trying to reorganise all of our various supply chains to ensure that increased costs are mitigated as much as possible and to keep the brands as competitive as possible,” he said.
Back in Holywood, Heidi Steffen believes businesses should embrace the opportunities from Northern Ireland’s post-Brexit status with a foot in each of the EU and UK economic camps.
“We have a completely unique situation and we should stop complaining about it and use it the way it works best for us,” she said.
“Everything used to come from across the water. Now I do like to deal with southern Ireland and suddenly I really like that things come up from there. It feels good to me.”
