Irish food industry is better prepared for Brexit than other sectors, says FDI

11 Jun 2018 --- Irish industry group Food Drink Ireland (FDI) has published its quarterly Business Monitor which includes an analysis of food and drink responses to a recent Ibec Brexit survey of businesses across Ireland. FDI has said the food industry fears the impact of Brexit but remains better prepared than other sectors ahead of Brexit next April.

Ireland's food and drink companies fear that UK's exit from the EU will leave them disrupted supply chains and tackling compliance costs, according to Ibec's latest survey of the sector. More than eight out of 10 companies cited the more significant regulatory cost burden as their top Brexit concern, according to a survey published today.

FDI Director Paul Kelly says: “Food and drink companies are actively engaged in Brexit planning. With 35 percent of food and drink exports going to the UK and further 33 percent destined for the rest of the EU mainly via the UK land-bridge, it is clear they are more worried than other business sectors even though they are better prepared. The government must implement policies to help mitigate the risks facing the sector by addressing cost competitiveness in the economy and assisting companies to innovate and improve productivity.

“FDI continues to call for Brexit policy measures to support and protect Ireland’s most important indigenous sector including a transition period of sufficient duration; an ambitious EU-UK future trade agreement that avoids tariffs, TRQs and regulatory divergence and no hard border with Northern Ireland. There is also a compelling case for exceptional state aid support to minimize the economic fallout arising from Brexit.”

Key survey findings include:
59 percent of food and drink companies had a hedging or pricing arrangement in place (an increase from 51.5 percent in summer 2016 when the previous Ibec Brexit survey was published) compared with 35 percent of businesses generally.

The most common elements of contingency plans for food and drink companies are:
• Focus on new geographical markets outside the UK (50 percent compared with 32 percent for all business).
• Diversification of business into new products (33 percent compared with 25 percent for all business).
• Alternatives to the transit of goods through the UK (28 percent compared with 25 percent for all business).
• Sourcing strategies for materials (22 percent compared with 21 percent for all business).

From an export perspective, 50 percent of food and drink companies said Brexit would have a negative impact on the value of export sales (an increase from 42 percent in summer 2016) compared with 28 percent of businesses generally.

The most significant impacts that the UK leaving the EU would have on respondent’s businesses in the food and drink sector were:
• Cost of customs compliance with procedures with NI/GB (83 percent for food and drink compared with 45 percent for all business).
• Exchange rate movements (67 percent for food and drink compared with 47 percent for all business).
• Value of export sales (56 percent for food and drink compared with 29 percent for all business).
• Volume of export sales (50 percent for food and drink compared with 27 percent for all business).

The deeply integrated nature of food and drink supply chains across the island of Ireland were reflected in responses to a question on the impact of Brexit on the island of Ireland. 89 percent expressed concern about increased custom and certification procedures (60 percent for all businesses) and 72 percent highlighted the risk to all-island supply chains, including rules of origin (43 percent for all businesses).