FDI calls for cost competitiveness in the run-up to Brexit

30 May 2018 --- Food Drink Ireland (FDI), the Ibec group that represents the food and drink sector, is calling on the UK government to prioritize cost competitiveness to ensure that the food and beverage industry is ready to meet the substantial challenges that lie ahead. While the agri-food industry is most at risk in the event of hard Brexit, there is the ongoing impact of a considerable weakening in sterling over the past 24 months.

At the launch of the group’s latest document, “Improving Competitiveness: Policy priorities for the food and drink sector 2018,” FDI Director Paul Kelly states: “It is imperative to implement policies to control our cost base and best mitigate the risks facing the sector. This must be done while helping companies innovate and improve productivity. The primary concerns in this regard are labor costs, poorly designed regulation and rising insurance costs.”

Kelly also says there is a compelling case for exceptional state aid support to minimize the economic fallout arising from Brexit. He notes: “Brexit represents a serious disturbance in the Irish economy due to the fracture of the single market. Exceptional state aid support should be provided to food and drink businesses most impacted to enable stabilization, competitiveness and diversification to continue. This will necessitate a multi-annual funding framework in the region of 5 percent of the value of current annual indigenous export sales to the UK (€650m over three years).”

“The wider Irish economy is more dependent on the agri-food sector than it is on any other manufacturing industries. Our sector accounts for almost half of direct expenditure by the entire manufacturing sector in the Irish economy. As a result, it has a high employment multiplier, supporting employment in other parts of the economy in a way that other manufacturing sectors simply cannot.”

“Uniquely, this economic activity is dispersed throughout all regions of Ireland, particularly in rural areas. It is therefore at the heart of the social fabric of rural Ireland. The ramifications of Brexit or failure to implement policies that support the agri-food sector will be felt across the entire Irish economy,” he explains.

“Improving Competitiveness: Policy priorities for the food and drink sector 2018” outlines the policy priorities for the following issues: 
• Brexit response.
• Market diversification and market access.
• Competitiveness.
• Sustainability.
• Innovation, skills and human capital.