Ibec calls for budget funding for food and drink manufacturers

The Irish food and drink sector performed strongly in 2021 with exports increasing by 4% to €13.5bn but FDI says the sector faces 'severe and unprecedented inflationary pressures'. 

Food and drink business representatives have called for budget funding to help the sector increase manufacturing.

Ibec group Food Drink Ireland (FDI) said high costs have put pressure on manufacturers and urged the Government to invest funds from the Brexit Adjustment Reserve into the sector.

“While manufacturers may have achieved some cost recovery in the market, this has fallen greatly short of cost inflation as evidenced by the massive increases in energy and commodity costs versus the lower level of food inflation recorded in the Consumer Price Index,” said FDI director Paul Kelly.

Mr Kelly said the food and drink sector is “deeply resilient” but is battling economic headwinds such as global and domestic supply chain constraints and the war in Ukraine, as well as Brexit and Covid-19.

Ireland’s food and drink sector performed strongly in 2021 with exports up by 4% to €13.5bn. The group said that while growth continues this year, the industry faces “severe and unprecedented inflationary pressures”.

FDI urged the Government to increase its Capital Investment Scheme to “well beyond” €100m and to extend it to all food and drink manufacturing sectors. The group also requested Government reduce excise on alcohol products by at least €50m.

In its pre-budget submission, the lobby group requested that the Government make the 9% rate of Vat for hospitality permanent.

The Vat rate is set to return to its pre-pandemic rate of 13.5% at the start of next year, a decision that has led to much backlash from those in the tourism industry.

Chief executive of the Irish Tourism Industry Confederation, Eoghan O’Mara Walsh, recently said many working in the industry see the planned Vat rate hike as damaging to competitiveness, and likely to depress the recovery of Ireland’s largest indigenous industry and biggest regional employer.