Ibec Group Calls For Reduced State Aid Regulation For Irish Producers Post-Brexit

The Irish agri-food and drinks sector should receive exemptions from EU state aid rules to offset the economic consequences of a hard Brexit, a business representation organisation has demanded.

Food Drink Ireland (FDI), the Ibec group that represents the food and drink sector, called on the Government and the European Commission to put in place a comprehensive package to help viable businesses deal with the fallout of Brexit, the fracture of the EU single market and the disruption to Ireland’s vital export trade.

This package would be important in the case of a hard Brexit, as outlined by the Copenhagen Economics report commissioned by the Department of Business, Enterprise and Innovation, according to Ibec.

Heather Humphreys TD, Minister for Business Enterprise and Innovation, will hold a major conference in Croke Park today at which Copenhagen Economics will present its findings, after the study is considered by Cabinet earlier in the day.

The study examined the implications and quantifies the impact of possible new barriers to trade as a result of Brexit. It considers a range of scenarios, an EEA-type scenario, a customs union-type scenario, and FTA scenario and a worst case, WTO scenario, according to the department.

Uniquely Exposed

FDI Director Paul Kelly said: "The Irish agri-food and drink sector and its 230,000 associated jobs is uniquely exposed. €4.5bn of food and drink exports are destined for the UK, with the Copenhagen Economics report highlighting that beef, processed food and dairy are the Irish sectors most at risk. There is a compelling case for exceptional state aid support to minimise the economic fallout and job losses arising from Brexit.”

Kelly continued by saying that currency fluctuations were already putting a strain on Irish exporters.

“Already the Euro-Sterling currency squeeze is putting intense strain on exporters,” he said. “This pressure is likely to intensify as the challenges and economic costs of a hard Brexit crystallise.”

Yesterday, Kerry Group posted its annual sales for 2017, which saw negative currency impacts from both the US Dollar and Sterling on its business. It also decided to cut 31 jobs at a Co Monaghan facility as a result of the weak Sterling.

Targeted State Aid

“State aid support should be targeted by Government through measures to help the sector innovate to maintain its competitiveness, diversify export market profile and transform in the face of the dangerous impacts of Brexit,” Kelly said.

The funding should come from both EU and Government sources to allow the Irish Government to introduce investment aids to support Irish companies to invest in enabling technology, plant renewal and expansion, refinancing, market diversification and innovation to regain competitiveness following single market fracture, according to Kelly.

These resources should be made available to both exporters and smaller Irish producers at risk of being displaced by cheaper UK imports, he said.

“In the short term, the objective must be to put in place mitigating measures to help companies manage their businesses through on-going currency shifts and during exit negotiations and the transition period,” Kelly continued.

“The medium-term focus must be on maintaining market share in the UK, developing international markets and ensuring that in the domestic market, companies remain competitive against imports and the threat of cross-border shopping," he said.