‘Food and drink sector will need proper supports post-Brexit’

Food Drink Ireland (FDI), the Ibec group that represents the food sector, today launched its Budget 2018 submission to the government.

The submission calls on government to bring in a series of measures so that the sector can maintain its competitiveness and achieve its growth potential against the backdrop of Brexit and a significant weakening of the sterling currency.

In order to support businesses, funding must be provided over a 3-year period to help companies trade through any period of disruption, adapt and succeed into the future, FDI said.

The resources required will be in the region of 5% of the value of current annual export sales to the UK by Irish agri-food, or €600 million over three years.

This would be funded from both government and EU sources to allow the Irish government to introduce investment aids.

These aids would support Irish companies that invest in: enabling technology; management training; plant renewal and expansion; refinancing; market development; and innovation, to regain competitiveness following the single market fracture.

These resources, where appropriate, should be available to both exporters and smaller Irish producers, which risk being displaced by cheaper UK imports in their home market, the group said.

FDI Director Paul Kelly commented on the submission, stating: “Almost 40% of our food and drink exports (€4.1 billion) go to the UK.

Our industry has already been severely impacted by exchange rate exposure, with the value of trade to the UK reduced by €570 million in 2016.

“The continued weakening of sterling will cause further reductions to the value of exports as well as job losses.

“Budget 2018 must support our efforts to maintain strong markets in the UK, as well as ensuring that food companies in the domestic market remain competitive against imports and the threat of cross-border shopping.

“To do this we need to keep business costs under control. At a time of such uncertainty, government also needs to avoid ill-considered public health measures such as soft drink taxes and proposals to introduce deposit return schemes for packaging,” Kelly said.

To support the wider food, beverage and hospitality sector, the 9% VAT rate needs to be maintained and alcohol excise reduced by 3.5%.

The FDI’s submission is split under two headings: Brexit proofing; and consumer taxation.

Under the Brexit proofing heading, as well as the €600 million funding for Brexit mitigation, the group calls for: changes to the EU State Aid rules; increased funding for state agencies; more trade support and market opportunity measures; and for the 9% reduced VAT rate in hospitality to be maintained.

Meanwhile, under the heading of consumer taxation, the organisation has asked the government to: reduce alcohol excise by 3.5%; maintain existing VAT rates; avoid tax on soft drinks; and stop proposals to introduce a deposit return scheme for packaging.