Agri-food sector ‘faces minimum 8% increase in Brexit-related costs’

The agri-food industry is the sector most exposed and impacted by the change in our new relationship with the UK – and this must be reflected in funding decisions by government, according to the Irish Cooperative Organisation Society (ICOS).

The organisation was commenting following confirmation by the Minister for Foreign Affairs Simon Coveney that Ireland is to receive €1.05 billion under the EU’s Brexit Adjustment Reserve last night (Tuesday, January 13).

ICOS president Jerry Long welcomed confirmation that Ireland is to receive 25% of the overall EU funding available:

“This is in recognition that we are the country most impacted by Brexit,” he said.

The agri-food industry has been preparing for Brexit since the 2016 referendum; however, the consequences are long-term and are leading to major changes in industry, which require continued support.

“In order to reduce our dependence on the UK market, our cooperatives are investing heavily in diversifying products to export to new markets, a process which will continue over the coming years.

“We must also continue to invest in our actions on the environment and climate, both at farm and processing level to maintain our position as partner of choice for sustainable and premium agri-food products within the UK, EU and North American markets.

Trade with UK ‘more expensive’

“Trade with the UK has now become more expensive for business, despite the agreement reached in December, due to the imposition of new administration and controls for importing and exporting businesses.

At minimum, we estimate an 8% cost increase for the agri-food sector as a result of these additional certification and administration processes.

“The Brexit adjustment funding must go towards mitigating these costs, supporting preparation by businesses, such as further recruitment of new personnel, technology, training and upskilling, and there should also be a retrospective element to the funding as many businesses have already incurred very significant costs.

“The UK’s departure from the EU also has brought implications for our all-island dairy economy, as products of mixed milk origin are now unable to access EU market supports and in many cases they also cannot benefit from preferential access provided by EU free trade agreements on international markets.

“This leaves the industry particularly vulnerable and in need of support as it adjusts to these new complexities,” said Long.

ICOS said the funding should therefore be administered in the form of schemes, such as the following:
  • Export trade financing and export credit guarantees. Expanding to new markets can put a strain on cashflow, due to upfront logistical, marketing and regulatory costs. Government backed export finance, in the form of loans, guarantees and insurance policies would ensure businesses have affordable and secure finance to manage cashflow and reduce risks;
  • Production and logistical capital investment support;
  • Support for investment in sustainable agriculture and processing;
  • Market research and promotion supports, via Bord Bia;
  • Recruitment, training and upskilling within businesses.

ICOS represents 130 co-operative enterprises in Ireland, with over 150,000 individual members.