Food Drink Ireland (FDI), the Ibec group representing the food and drink sector, has emphasised the importance of government policy in ensuring the competitiveness of Ireland’s largest indigenous manufacturing sector amidst growing challenges.
In the ‘Competitive Food and Drink: Policy priorities of the food and drink sector 2024’ report published today (Thursday, March 28), labour costs are identified as one of the sector’s primary concerns.
There are almost 165,000 jobs in the agri-food sector in Ireland with a €29.5 billion turnover per year.
There was €16.3 billion worth of agri-food exports to 180 countries last year according to FDI, as Ireland exports 90% of its produce.
FDI director Paul Kelly stated: “In a challenging environment, exports remain resilient and have been valued at greater than €16 billion for the last two years.
“The sector’s continuing ambition is reflected in the €21 billion export target in Food Vision 2030 but it faces a range of challenges attributed to Brexit, Covid-19 and Russia’s invasion of Ukraine including the cost of commodities, energy and transport.
“One of the most significant challenges now facing food businesses is the cost of labour.
“The rise in the minimum wage, enhanced protective leave entitlements, changes to statutory sick pay and other measures are leading to cumulative increases in labour costs of more than 25% for some companies.”
FDI has said the absence of any direct supports from the government will threaten the financial viability of many low margin food businesses.
“Government should assess the extent and timing of any new initiatives for their cost impact on the food and drink sector as higher compliance costs for businesses will lead to a loss in competitiveness and greater food price inflation for consumers and therefore further upward pressure on the cost of living,” Kelly added.
“Strong consideration should also be given to pausing the implementation of any measures likely to increase costs for the sector.”
‘Competitive Food & Drink: Policy priorities of the food and drink sector 2024’ outlines policy priorities for the following:
- Competitiveness;
- Sustainability;
- Skills and human capital;
- Innovation;
- Food safety and nutrition;
- Export markets – international trade / Brexit response.
Food and drink sector
The agri-food industry has deeper links to the wider economy than the rest of manufacturing.
Food and drink manufacturing accounts for half of direct expenditure by the entire manufacturing sector in the Irish economy (payroll, Irish materials and Irish services), according to FDI.
The sector plays a key role in the wider rural and local economy, with estimated output multipliers ranging from around 2.5 for beef, 2.0 for dairy and food processing and 1.75 for seafood, compared to an average output multiplier of 1.4 for the rest of the economy and 1.2 for foreign-owned firms.
As a result, of these high employment multipliers, the sector supports employment in other parts of the economy in a way that other sectors do not, FDI added.
The sector provides the exclusive outlet for much of farmer or small and medium-sized enterprise (SME) produce, providing extensive added value and is therefore important to farm incomes.
90% of Irish dairy product is exported, with €6.3 billion worth of exports annually to over 140 international markets, making it Ireland’s largest and most successful native industry.
Meat and livestock exports in 2023 are valued at just over €4 billion with exports to 90 markets.
Beef is the single largest export with €2.7 billion worth of Irish beef and offal exported in 2023. Meanwhile, Irish whiskey is the world’s fastest growing premium spirits category.