Call to cut food/drink sector costs

IRELAND’s food and drink industry needs to cut costs by 20% to sustain the sector’s recovery based on growing exports but hampered by difficult domestic market conditions, according to Food and Drink Industry Ireland (FDII).

FDII, a business sector in IBEC, today publishes its 2010 Competitiveness Indicators Report, which shows that the sector is on a recovery path after an extremely difficult 2008/2009 period.

FDII director Paul Kelly said: “The competitive position of Ireland’s food and drink sector has improved as a result of economy-wide deflation, affecting many input costs, and exchange rate factors. However, a further significant improvement in cost competitiveness is needed to generate sustainable export-led growth.

“As exchange rate factors are outside of our control, further competitiveness improvements must focus on key input costs, including labour, energy, transport, waste and water costs.”

Mr Kelly said the Government’s agri-food strategy Food Harvest 2020 presents a clear and articulate vision for the future of the sector and sets ambitious growth targets.

“The challenge is to address the barriers that could hold us back. The report highlights a number of areas in which the competitiveness of the sector can be improved and those barriers overcome.”

The report’s main recommendations include:

* A 20% improvement in cost competitiveness;

* A halt to proposals to increase the landfill levy and introduce an incineration levy;

* The completion of industry-led strategic research agendas in the sector;

- Greater emphasis on the ability of SMEs to absorb research;

- Implementation of the Expert Group on Future Skills Needs Report on the Food Sector

- The completion of the process of introducing legislation to ensure fair trading conditions.

FDII points out that the Irish food and drink industry is Ireland’s most important indigenous sector, employing 106,000 people, with a turnover approaching €24 billion. It accounts for two-thirds of all indigenous exports and total exports this year will exceed €7.5bn.

“The fact that the industry is closely linked with agriculture in all regions of the country, utilising 90% of the output of Ireland’s 120,000 farmers, and is headquartered here, means that it is affected more than any other industry by business, regulatory and policy framework in Ireland and the associated cost base,” Mr Kelly said.