Spiralling costs must be tackled, warns ICMSA

Ray Ryan, Agriculture Correspondent

The ICMSA maintains the wage bill in the sector will have to be capped if Ireland is to retain competitiveness on international markets.

Pat O’Rourke, president, said costs generally, but wages and insurance in particular, must be controlled and reduced where possible.

“The PPF has added over 70 million to payroll costs directly in the food processing sector. The full impact of the PPF, including the increased costs of services bought in, would be in the region of 100m.”

Mr O’Rourke said these increased costs cannot be passed on to customers and come directly from the price paid to farmers.

The wage bill in the food processing sector increased from 462m in 1999, the year before the start of the PPF, to an estimated 533m in 2002.

In contrast, farm incomes will decline this year and are 250m lower than in 1996, without taking account of inflation.

Mr O’Rourke said the effect of the PPF was to transfer more of the returns from the marketplace to workers in the processing sector, to the detriment of farmers and competitiveness generally.

Some 21,000 people are employed in the dairy and meat processing sectors. The average wage in the dairy sector is 31,000, which is above the average industrial wage. The dairy industry in particular has provided secure and good terms of employment.

“Both the dairy sector and meat processing sector must live within the existing total wage bill of 533m. This can only be achieved by reduced numbers and increased productivity if wage rates are to increase further.

“The consequences of not doing this will be to rapidly lose further competitiveness, which will lead to a substantial reduction in the numbers employed in these two sectors.”

Mr O'Rourke said the ICMSA will not be party to any agreement which does not address the impact of wages and costs in the food sector as these have a direct impact on farm incomes.

ICMSA farm services and environment committee chairperson John O'Connor said the Government must take immediate action to address the spiralling cost of insurance and the impact these increases are having on all sectors of the economy.

“Not only are farmers suffering due to increases to their own insurance premiums, but they are also suffering from increases in the input supply sector and food processing sector as insurance hikes are passed on,” he said.

“In the food processing sector alone, insurance costs will be some 46m higher in 2002. Such an increase is simply unacceptable and unsustainable,” Mr O’Connor said.