Food Drink Ireland (FDI), the Ibec group that represents the food and drink sector, today published its quarterly Business Monitor (see attached pdf) which includes an analysis of food and drink responses to a recent Ibec Brexit survey of businesses across Ireland.
FDI Director Paul Kelly said: “Food and drink companies are actively engaged in Brexit planning. With 35% of food and drink exports going to the UK and further 33% 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. Government must implement policies to help mitigate the risks facing the sector by addressing cost competitiveness in the economy and helping companies 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 minimise the economic fallout arising from Brexit.”
Key survey findings:
59% of food and drink companies had a hedging or pricing arrangement in place (an increase from 51.5% in summer 2016 when the previous Ibec Brexit survey was published) compared with 35% 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% compared with 32% for all business)
· Diversification of business into new products (33% compared with 25% for all business)
· Alternatives to transit of goods through the UK (28% compared with 25% for all business)
· Sourcing strategies for materials (22% compared with 21% for all business)
From an export perspective 50% of food and drink companies said Brexit would have a negative impact on the value of export sales (an increase from 42% in summer 2016) compared with 28% of businesses generally.
The biggest 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% for food and drink compared with 45% for all business)
· Exchange rate movements (67% for food and drink compared with 47% for all business)
· Value of export sales (56% for food and drink compared with 29% for all business)
· Volume of export sales (50% for food and drink compared with 27% 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% expressed concern about increased custom and certification procedures (60% for all businesses) and 72% highlighted the risk to all-island supply chains, including rules of origin (43% for all businesses)
Companies are also looking at skills needs and potential shortages after Brexit. Customs procedures is seen by 66% of companies as the area where the greatest skills shortages are likely to occur. Training existing staff supplemented by recruitment within Ireland is seen as the primary remedy. Logistics, distribution and supply chain management skills are the next most frequently cited areas where skills shortages are anticipated.
- Food Drink Ireland Business Monitor - Q2 2018.pdf - 511 Kbytes