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Firms face losing vital access to Britain if no trade and security agreement is found in the next 50 days. Industry leaders have called for a furlough-style wage support package to be introduced by the Irish government in order to protect jobs. And a new report by the Ibec Group, which represents the food and drink industry, said financial support would be required regardless of the outcome of the negotiations between the EU and UK.
Chiefs have called for almost €700million in financial support to guard the sector from the “economic disturbance” of Brexit.
Paul Kelly, Food Drink Ireland director, said: “The Irish food and drink sector is by far the most exposed of any sector in any country in Europe to Brexit – deal or no deal.
“Supports are urgently needed not just to save companies within the food and drink sector, but also the jobs, communities and downstream suppliers sustainability.
“Irish food products account for seven of the ten most exposed country/ food and drink product matches in the EU, with significant additional costs for Irish food and drink companies potentially arising from additional customs procedures, regulatory burdens, and rising transport costs.”
The report highlights the Irish market’s reliance on Britain as one of its main export partners.
In 2019, over 37 of Irish food and drink exports, valued at around €4.5billion, were sent to the UK, according to the report.
It calls for an “enterprise stabilisation” scheme that would see the Irish government fund wages for companies worst-hit in the event of a no deal Brexit.
The report says: “The food and drink sector is deeply resilient but now faces major disruption to its markets from Brexit in the midst of a global pandemic.
“A no deal Brexit would result also in significant tariff barriers plus additional non-tariff barriers. Each of the main food and drink sectors would see substantial falls in output. These falls would be long lasting and would persist over time, with many products having few alternative markets.
“Market diversification involves considerable risk and expense. New market penetration is a long game, requiring significant investment with no guarantee of success. Even within the single market companies face barriers in establishing commercial relationships and supply chains.
“In addition, they must build cash ow, innovate and invest to tailor the product to consumer tastes and deal with new regulatory regimes. The further goods travel the tighter margins will be as transport costs increase. Significant resources will be needed to help companies meet these challenges.”
It was estimated that funds of around five percent of the total value current annual Irish sales to the UK will be needed to support the sector.
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That could see as much as €675million being pumped into the food and drink industry over the next three years.
Some of the cash could come from the EU’s proposed €5billion Brexit Adjustment Reserve, which was announced earlier this year by European Council President Charles Michel.
It was understood the bailout fund would mostly be used to prop up Ireland, as well as French, Dutch and Belgian fishing towns.
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With just 50 days until the end of the Britain’s transition from the EU’s rulebook, Irish firms are racing to prepare for the new realities they face.
Companies are attempting to secure extra storage space across Ireland in the event supply chains are hampered.
Stafford Lynch, a Dublin-based distributor of brands including Tetley Tea and Wilkinson Sword razors, said major UK firms are even appealing for storage case as their warehouse capacity is expected to run out.
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