Food Sector Wants €600m State Funding

23 Aug 2017 | 12.52 pm

Food Sector Wants €600m State Funding

Ibec demands ‘Brexit-proofing’ measures

23 Aug 2017 | 12.52 pm

Ibec’s food sector division is looking for extra state subsidies of €600m over a three year period to help cope with the anticipated effects of the UK leaving the European Union.

In its pre-Budget submission to the government, Food Drink Ireland says taxpayers must help the sector maintain competitiveness after Brexit, and asserts that €600m will be needed to finance a series of measures it sets out in the document, coming from both EU and state coffers.

The €600m would represent about 5% of the current value of UK export sales in the sector, and “must be provided over a three year period to help companies trade through any period of disruption, adapt and succeed into the future,” the organisation says.

Director Paul Kelly stated: “Almost 40% of our food and drink exports (€4.1 billion) go to the UK.  Our industry has already been severely impacted by exchange rate exposure, with the value of trade to the UK reduced by €570m in 2016. The continued weakening of sterling will cause further reductions to the value of exports as well as job losses.

“Budget 2018 must support our efforts to maintain strong markets in the UK, as well as ensuring that food companies in the domestic market remain competitive against imports and the threat of cross-border shopping. To do this we need to keep business costs under control.

“At a time of such uncertainty, government also needs to avoid ill-considered public health measures such as soft drink taxes and proposals to introduce deposit return schemes for packaging. To support the wider food, beverage and hospitality sector, the 9% VAT rate needs to be maintained and alcohol excise reduced by 3.5%.”

FDI summarised its demands as follows:

Brexit Proofing

  • Changes to the EU State Aid Rules
  • Increased funding for state agencies
  • More trade support and market opportunity measures
  • The 9% reduced VAT rate in hospitality to be maintained.

Consumer Taxation

  • Reduce alcohol excise by 3.5%
  • Existing VAT rates to be maintained
  • No tax on soft drinks
  • Proposals for a deposit return scheme for packaging should be opposed.

The lobby group says that the immediate measures it wants in Budget 2018 should include:

• A multi-annual framework for funding Brexit mitigation. Funds should be targeted at supporting innovation, market diversification, upskilling and capital expenditure in plant, equipment and machinery.

• Working with the European Commission, the government must deliver a temporary state aid regime allowing for enterprise stabilisation funding to be released for otherwise viable business.

• Government departments must be provided with the necessary resources to support rapid market access.

• State agencies Bord Bia and Enterprise Ireland must be provided with the necessary resources to support market development: in-market intelligence; in-market promotion, and in market trade support in the UK and other markets.

• Enterprises must be provided with support through the state agencies for market development and investment in international sales and marketing in the UK and other markets. This should include support for placement of marketing executives in international markets by food and drink businesses.

• Introduce medium term measures to allow the Irish Government to introduce investment aids to support Irish companies invest in enabling technology, management training, plant renewal and expansion, refinancing, market development and innovation to regain competitiveness following single market fracture.

• Introduce trade support measures including export trade financing and export credit guarantees to support the continued development of international export markets.

• Make sure that more SMEs can gain access to the online trading voucher by expanding its upper limit on employment to 50 and turnover limit to €10 million.

• Work with larger and mid-sized retailers to provide international supply chain opportunities and training to smaller producers.

• Retain the 9% tourism VAT rate and invest in Ireland’s regional tourism infrastructure.

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