Food sector on alert for Brexit impact

In her latest update, head of Food & Drink Sector at Bank of Ireland Roisin O’Shea notes the continued impact of Brexit and concerns around supply chain shortages, Budget 2022 and the recent Report of the Seafood Task Force.

Brexit

Talks are ongoing between the UK government and the EU regarding the practical operation of the Northern Ireland protocol. The UK issued a command paper in July highlighting key areas of concern – namely trade within the UK, access by Northern Ireland consumers to goods and governance of the protocol with the emblematic example of sausages being used to illustrate the first point.

The EU has responded with what has been seen as a generous set of proposals around the movement of goods and particularly food. In the case of food, mixed loads going to supermarkets from the UK would only require one certificate stating that the goods met EU standards.

“The scope of a Food Ombudsman’s office along with its staffing levels remain to be confirmed”

However, if UK food standards were to significantly diverge from EU standards over the medium to long term this would become problematic. Talks continue between the two sides.

Report of the Seafood Task Force

The taskforce, comprising a range of industry and state representatives was convened to examine the future of the fishing and seafood industry in Ireland, particularly in the aftermath of Brexit. The taskforce had already made recommendations for a short term tie up of some of the white fish fleet in its interim report.

It recommended an overall funding requirement of €423m to be funded between the Brexit Adjustment Reserve and the European Maritime Fisheries & Aquaculture Fund. €75m to be allocated to decommissioning –particularly in the whitefish fleet to ensure stronger viability for remaining fishers; €70m for short term measures including tie ups and liquidity supports to allow for adjustment to post Brexit conditions and the remaining €277m to focus on longer term growth initiatives to the sector.

These longer terms initiatives include support for aquaculture, development of added value processing capabilities, improved coastal infrastructure and marine enterprise development.

Supply chain shortages

Commodities price increases and supply chain shortages continue to be a key focus for the sector. Retailers have begun accepting price increases from suppliers and this can be seen coming through in food inflation in September (+.4pc year on year for food and non-alcoholic beverages) in Ireland, with these figures likely to increase into the last quarter. Food prices are also rising in the UK (+3pc for food and non-alcoholic beverages in August ’21 vs a year ago10) and Eurozone (+1.9pc in August ’21 vs 2011).

Budget 2022

Budget 2022 confirmed €4m funding for the establishment of a Food Ombudsman’s office, this office had been flagged in the Food 2030 strategy earlier in the year, however details of the scope of the office along with its staffing levels remain to be confirmed. An excise exemption of up to 50pc for independent cider and other fermented beverage makers was also announced. This is similar to the craft beer exemption that came into play fifteen years ago and which has resulted in an increase in brewery numbers from 8 to 75.

Sector Development Insights October 2021 report:

Sector Development Insights October 2021
Roisin O’Shea
Roisin O’Shea is head of Food & Drink at Bank of Ireland.

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