Thursday 23 January 2020

Food, drink firms face out-of-step costs - Ibec

Irish expenses weigh on growth

Support: Food Drink Ireland director Paul Kelly says the industry’s fate is linked to the wider economy
Support: Food Drink Ireland director Paul Kelly says the industry’s fate is linked to the wider economy

Shawn Pogatchnik

FOOD and drink producers face struggles to stay competitive, particularly when exporting to the UK where sterling's weakness has slashed the value of sales by 30pc, according to an industry report.

The 10-year strategy report by Ibec unit Food Drink Ireland called on the Government to widen the employment permit system for food processors, and help firms to automate and digitise their work wherever possible.

The report said an "ambitious EU trade agenda" was needed to open new markets for exporters overly dependent on UK trade - because Ireland is four to five times more dependent than other EU states.

It said any future UK-EU free trade deal must avoid "tariffs or other import quota regimes".

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Since 2010, Irish food and drink exports have grown by 36.6pc to the UK to €4.5bn, and by 50pc to €4bn to the rest of the EU.

"One in eight jobs in the Irish economy is linked to agri-food and drink. Sustaining growth for the sector is imperative to sustain the growth of the wider economy," said Paul Kelly, director of Food Drink Ireland.

"The industry's competitiveness has declined at a time when both opportunities and challenges are increasing," he said, adding that "Irish infrastructure costs such as labour, energy, waste, environment and other business compliance and regulatory costs are significantly out of step" versus EU norms.

Mr Kelly said sectoral costs had risen by 11pc overall from their 2011 trough, mostly in the past two years. He said these increases, "combined with the sharp depreciation of sterling since 2015", meant Irish exporters to the UK netted 30pc less than four years ago.

He said food and drink firms needed stronger Government supports "to control our cost base, while providing support for companies to innovate and improve both productivity and sustainability".

The report suggested that food processors - commonly dependent on workers from eastern Europe and non-EEA nations, including Brazil - faced rising challenges to staff operations.

It called on the Government to "extend the employment permit scheme across the food processing sector so that labour shortages do not impact on existing businesses and growth prospects".

The report said delays in reforming employer and public liability insurance were driving up costs too. It called on the Government to enforce "claims transparency, benchmarking the level of personal injury damages and streamlining the litigation process".

The report proposed a paid internship programme for PhD students in indigenous food and drink firms.

The programme, it said, would be "aimed at installing innovation expertise directly into business operations".

Irish Independent

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