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Brexit vote cost Irish food producers €570m

The Brexit vote cost Irish food producers more than €500 million last year, according to the Irish food board.

Bord Bia, which is responsible for promoting the sale of Irish food and drink in foreign markets, said that the weakness of sterling, which depreciated by 13 per cent against the euro last year, wiped €570 million off the value of Irish exports.

The euro, which was worth 76p on the day of the referendum, was trading at 87p yesterday while continued uncertainty around whether the UK would leave the single market sent the sterling plummeting to an 11-week low against the dollar. The pound was worth about $1.22 yesterday.

While the value of Ireland’s food and drink exports passed the €11 billion mark for the first time last year — marking the seventh consecutive year of growth for the industry — the adverse impact of the Brexit vote dominated Bord Bia’s performance prospects report. It said that export markets looked likely to remain challenging in 2017 amid ongoing market uncertainty.

Paul Kelly, the director of Food and Drink Industry Ireland, the Ibec group representing the food and drink sector, called for the government to increase funding for the sector by €25 million.

“Currency pressure following the Brexit vote has already hit exports and jobs. These problems have the potential to get a lot worse in the event of a single-market fracture post-Brexit. The national agri-food strategy, FoodWise 2025, identifies market development as one of the key strategic pillars to deliver growth. Brexit, however, has put that aspiration into sharp focus given currency challenges and potential new barriers to market access,” he said.

“A market diversification and product innovation strategy is required which focuses on maintaining UK market share, increasing exports to other EU and international markets and investing more in product development.” Mr Kelly said that the additional funding should be used to provide government departments and agencies, such as Bord Bia and Enterprise Ireland, with the resources to give companies access to new markets.

Michael Creed, the agriculture minister, said that the diversification of Irish food and drink businesses was a “notable feature” of 2016. “While trade with the UK fell by 8 per cent, triggered by challenging exchange rates, uncertainty arising from Brexit and further competitive pressures, this was offset by increased exports to international and emerging markets such as North America which increased by €200 million to reach €1.1 billion,” Mr Creed said.

Exports to China increased by 35 per cent to €845 million while sales to the rest of Asia grew by 6 per cent to €330 million.

Patricia Callan, the director of the Small Firms Association, called for the government to improve funding for businesses through initiatives such as the reintroduction of the enterprise stabilisation fund. The €100 million fund, which was introduced in 2009 to help firms affected by the financial downturn, allowed Enterprise Ireland to give up to €500,000 to companies facing difficulties during the recession.

Ms Callan said the reintroduction of the scheme would require temporary changes to EU state aid rules — as it did when first introduced. She added that the proposal had been raised with Mary Mitchell O’Connor, the jobs minister, and added that the government needed to clearly articulate Ireland’s situation to EU leaders in order to support Irish firms affected by the Brexit vote.

“New measures to support businesses are needed to ride out the storm for now. There may be opportunities arising from Brexit down the line but first companies need to survive the next two years to be able to take advantage of them,” Ms Callan said.

A spokeswoman for the Department of Jobs said that Ms Mitchell O’Connor had secured additional funding for Enterprise Ireland to support indigenous exporters, which would result in 39 Brexit-related roles being created.

The agency is working with companies most exposed to Brexit in areas such as engineering, food, construction and timber. She added: “Clients who are more prepared before entering the market and engage with in-market Enterprise Ireland teams have a greater chance of sustained export success.

“Enterprise Ireland will also deliver a suite of supports that help clients reduce supply-chain costs and drive efficiencies and cost reductions as a means of improving operating margins, thereby increasing competitiveness.”

Source: - 12 January 2017