7,500 Irish Food and Drink Jobs at Risk After Brexit Hit on Sterling

22 Dec 2016 --- Irish mushroom growing farms have been closed down since Brexit amid warnings from Food and Drink Industry Ireland (FDII) that up to 7,500 food and drink sector jobs are at risk. At least 10 percent of Irish mushroom farms have been axed after farmers found themselves facing a crisis as they were tied to fixed contracts set in sterling.

The closure of the farms- amid a steep decline in the value of sterling against the euro- could be a sign of further woes for the Irish food sector, which has close links to the UK. Mushroom growing in Ireland employs around 3,500 people, with at least 6 of the 60 mushroom farms in Ireland having closed down since the Brexit vote at the end of June.

A significant number of the 600 food companies in Ireland have exposure to the UK, through exporting meat and dairy to the UK.

Speaking to FoodIngredientsFirst, Paul Kelly, director of FDII, said: “Trade data which is available up to September shows that food exports to the UK are down significantly so far this year. We estimate that up to 7,500 jobs are at risk if sterling weakens to £0.90 v €1.00 for a sustained period.”

The FDII continues to make the case for unfettered access the UK food market.

Kelly said: “We will continue to make the case here in Dublin and in Brussels to those involved in negotiations that unfettered access is essential, not just for the Irish food sector but for the wider economy.”

“Due to the sectors deep linkages to the wider economy (for example food and drink manufacturing accounts for over half of the total economic spend by all manufacturing on payroll, goods and services in Ireland), anything less that single market access or equivalent will be damaging to the wider economy.”

However, Kelly points out that it is “very, very difficult to foresee” what form Brexit will take, which “creates a lot of uncertainty for business”.

“And when you have uncertainty, companies are less likely to take major investment decisions,” he added.

However Kelly said that food shoppers from Dublin and other big Republic of Ireland cities are unlikely to be heading to Northern Irish border towns to buy sterling-priced bargains, because the travel costs and recent slight rebound in the value of the pound against the euro mean it’s “not worthwhile”.

He was responding to recent reports that thousands of shoppers from Ireland were flocking to border areas such as Derry to cash in on the strength of the euro against the pound. 

They were taking advantage of the fact that the euro was valued at 90p, which compared to pre-Brexit when the pound was valued at between €1.35 and €1.45.

The reports suggested that some retail outlets were seeing an uplift of 30 percent in shoppers from Ireland, who were thronging retail and food outlets to grab bargains.

However, Kelly pointed out there had since been a recent slight revival in the value of sterling.

Kelly said: “The currency would have reached 90p to the euro and that would have triggered quite a lot of people heading north.”

“It’s come back now to 84 pence or thereabouts so that made quite a difference and certainly people close to the border may well be going over.”

“But for the larger population centres like Dublin, when you take into account the travel time and travel cost I think people make the rationale decision that it’s not worthwhile.”

However, there could be further concern for the Irish food industry as there are indications that sterling will weaken again in the New Year.

by John Reynolds