Friday 30 September 2016

Brexit job losses mount in food sector

100 jobs gone in mushroom farms and another 300 are in firing line

Declan O'Brien and Claire Mc Cormack

Published 13/09/2016 | 02:30

Another five mushroom businesses are predicted to close soon
Another five mushroom businesses are predicted to close soon

Up to 400 jobs are in the firing line at mushroom farms nationwide as Brexit claims its second victim within the sector.

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Gorman Mushrooms at Garryhinch near Portarlington informed 30 staff yesterday morning that it was ceasing to operate.

The dramatic weakening of sterling following the UK's June vote was a key factor in the decision.

The owner of the family-run business that produces mushrooms exclusively for export spoke to his staff of plans to wind down the 30-year-old business.

Up to five other mushroom businesses are also predicted to close over the next seven weeks unless there is drastic intervention by the Government.

Over 70 jobs were lost when McDonald Mushrooms in Tipperary announced its closure last month.

"Brexit has had a devastating impact," said Donal McCarthy of the Commercial Mushroom Producers (CMP). "Some growers problems are exacerbated by the supply of poor quality compost."

Mr McCarthy said he is urgently negotiating survival packages for troubled growers, but he said the industry was in real trouble. "The whole industry is bleeding," he said.

"The reality is that all the people growing for export are losing money. Some of our growers are losing up to €2,000 or €3,000 a week," he added.

Leslie Codd of Codd Mushrooms in Tullow, Co Carlow, which supplies 50pc of domestic demand, said the home market for mushrooms was also under serious price pressure due to increased competition from Northern Ireland suppliers and existing exporters.

He said the sector "desperately needs Government assistance, similar to 2008 when employers' PRSI was reduced to cope with the pound being at parity with the euro".

"Brexit will claim five more businesses before Halloween. It will lead to a mushroom shortage in supermarkets but they won't increase prices to growers until shelves empty because they could be saving €100,000 a week," Mr Codd said.

CMP has been negotiating support measures over the last three weeks with industry suppliers of compost, casing and packaging, as well as talks with marketing companies, in an effort to save growers.

"We're putting survival packages in place," Mr McCarthy explained. He said that while these support measures had "slowed down the bleeding", he cautioned that a significant price increase from British retailers was required to put businesses back on a sustainable footing.

Mr McCarthy said that the Brexit vote and a major drop in the value of sterling against the euro had totally eroded growers' margins over the last nine months.

"We had a 20pc shift in exchange rates, with the euro going from being worth 70p to 85p. That is not sustainable for a food business that works off margins in the low single digits."

He added that prices were agreed at exchange rates of as little as 70p sterling to the euro.

Bord Bia said it had organised workshops for exporters on managing currency volatility and negotiating strategies and more were planned for later in the year.

The mushroom industry employs around 3,500 people and is worth close to €100m in export earnings. Most of the exports are destined for the British market.

The Food and Drink Industry Ireland group warned yesterday that 7,500 jobs were at risk if sterling weakened to the £0.90/euro mark.

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