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Independent.ie

Friday 9 December 2016

Trump victory poses more 'uncertainty' for food sector

Declan O'Brien

Published 15/11/2016 | 14:45

Trump's victory has produced a new level of uncertainty Photo: Reuters
Trump's victory has produced a new level of uncertainty Photo: Reuters

Donald Trump's victory in the US presidential election has added "another layer of uncertainty" to an already troubled trading landscape for Irish food and drink exporters, industry representatives have warned.

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Paul Kelly of Food and Drink Industry Ireland (FDII), the Ibec group that represents the food and drink sector, said Trump's election had unsettled markets.

Kelly said the continuing volatility in sterling posed new and very serious challenges for food exporters.

He maintained that sterling's repositioning relative to other currencies was now "structural" rather than "cyclical".

This contention was supported by Mark Berrisford-Smith, head of economics at leading British bank HSBC, who predicted in Belfast last week that the British pound could move to parity with the euro.

Kelly said such a scenario would be disastrous for the Irish economy given the UK takes 41pc of the country's exports. The food sector would be particularly exposed, since Britain imports 70pc of our processed consumer foods, 56pc of meat exports and 60pc of cheese.

An FDII report on Brexit found that if sterling was to hold at the 90p mark, it would cost food exporters over €700m and result in the loss of 7,500 jobs.

"A structural shift in the exchange rate relationship, combined with Brexit related trade risks, means that UK buyers are planning significant supply chain restructuring - the real threat is a loss of confidence in Ireland as a competitive supply base resulting in loss of markets and exports," Kelly said.

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"The Government's short term objective must be to support companies as they reposition their businesses during this period of uncertainty.

"The focus must be on maintaining markets in the UK, developing other markets as well as ensuring that, in the domestic market, companies remain competitive against imports and the threat of cross-border shopping," he added.

The FDII has called on the Government to:

• Review the impact of Brexit on the objectives contained in FoodWise 2025.

• Re-introduce of the Employment Subsidy Scheme and the Enterprise Stabilisation measures which were last applied in 2009-11.

• Provide €25m in funding for market diversification and product innovation measures.

• Establish a finance package that includes sustainable financing via the Irish Strategic Investment Fund.

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