Forging the strongest economic links with European neighbours, as well as close friends in North America, the Commonwealth, and other partners around the world, is part of the UK government’s action plan for its food and drink sector up to 2020.
By then, the UK will probably have left the EU.
However, the plan indicates that one of the sector’s most ambitious targets is to send more exports to Germany, at the heart of the EU.
Incidentally, Ireland doesn’t get a mention in the plan, despite it being a major trading partner of the UK.
But the plan for strong economic links with EU neighbours indicates the UK is far from turning its back on us, which could, of course, be disastrous for our food and drink sector.
Things are bad enough already, with recent trade figures, for up to August, indicating that the value of Irish food exports to the UK fell by 8.1% in annual terms, but by 14.5% for the two months since the Brexit referendum.
The slump hit all food categories.
General merchandise exports to UK fell by almost 4% since the Brexit referendum.
With such ominous signals, it wasn’t surprising that Fianna Fáil Spokesman on Agriculture Charlie McConalogue, TD, said recently was absurd that the Government refused to review Food Wise 2025, our current ten-year strategy for our agri-food sector.
The government has acknowledged that the food industry is very exposed to the predicted 4% loss of national Irish Gross domestic produce due to Brexit.
But Agriculture Minister Michael Creed has said he sees no compelling reason at this point to review the strategy.
He said Food Wise 2025 was going well, with 28% of the 330 detailed actions which were due to commence in 2015 or 2016, achieved, or substantial action undertaken, and a further 67% commenced and are progressing well.
Referring to Brexit, he said, “It is clear that ensuring action is taken on the Food Wise recommendations, particularly those related to market development, competitiveness and innovation, assumes even greater importance in the light of the UK decision.
He added: “It is important whilst we keep the measures and actions for the sector in FoodWise under review, we do not allow the ambition for the agri-food industry to be undermined.”
In contrast, Fianna Fáil says that Brexit demands an urgent review of Food Wise 2025, a plan based on the assumption that the UK remains within the EU, as Ireland’s number one agri-food export destination, taking over 50% of our beef exports and 33% of our dairy exports.
Surely Fianna Fail’s call for a comprehensive review of Food Wise 2025 to take into account Brexit threats is valid, bearing in mind the government’s analysis of the effect ten years after a UK exit from the EU, which indicates Irish GDP could be almost 4% below a no-Brexit scenario, with most of the negative GDP impact coming in the first five years.
The level of employment, relative to a no-Brexit world, is expected to be 2% lower in the same scenario, and unemployment two percentage points higher, assuming no Brexit policy change by the Irish government.
The same analysis shows that those most exposed to the UK are indigenous enterprises, small in scale, concentrated in food and manufacturing industries, with relatively low profit levels, and a disproportionate concentration of employment in regional and rural labour markets.
Minister Creed says Budget 2017 has policies targeted at these exposed sectors — retention of the 9% VAT rate, extension of foreign earnings deduction, the special assignee relief programme, increased spending under the Rural Development Programme for 2017, the adjustment to the farmers income averaging system, increased PRSI benefits for the self-employed, an increase in farmer’s flat-rate VAT addition, and extra funding for Bord Bia.
People in the industry would find it more reassuring if the government didn’t appear to be slow to prepare for Brexit.
At least Finance Minister Michael Noonan has said he is interested in the possibility of developing an export guarantee arrangement for vulnerable Irish industries, and hopes to make an announcement on that before Christmas. But even he attributes reduction in business confidence to “uncertainty”.
While admitting some impact on exposed horticultural industries, such as the mushroom industry, he seeks to comfort food exporters by noting that the UK does not seem to have many alternative sources of supply if it is to replace its considerable agri-food imports from Ireland.
That may be so, but such hopes and aspirations are not near enough to reduce the uncertainty plaguing the industry, more than two years ahead of the UK’s expected farewell to the EU.
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