Ibec group focusing on sustainable food system as it grapples with Brexit fallout

It will come as little surprise to learn that food and drink product manufacturing is Ireland’s most important indigenous industry by some distance. Directly and indirectly, the sector is responsible for the employment of a quarter of a million people and generates turnover of €28 billion each year and is responsible for €13 billion in exports.

The importance of the industry is much greater than those numbers, impressive though they may be, according to Paul Kelly, director of Food Drink Ireland, the Ibec group which is the main trade association for the food and drink industry in Ireland.

“The industry represents about half of all direct expenditure by the entire manufacturing sector in Ireland on wages, materials, services and so on,” he says. “The sector also has very strong linkages back into the economy, particularly the rural economy.”

Exports continue to grow in importance, despite recent turbulence. “The industry’s exports are split roughly evenly between the UK, the EU and the rest of the world,” he points out. “There was a time when a much greater percentage went to the UK. This has lessened as Irish companies have diversified their markets. The percentage share may have gone down but the value has gone up. The UK remains our single most valuable export market. It is our closest market, and despite the frictions created by Brexit, the cultural similarities, common language and so on mean it will continue to be the first export market and the main market for a lot of smaller companies.”

Sustainability is a key issue for the future and is one of main pillars of the national Food Vision 2030 strategy. “The strategy is unique in that it is based on a sustainable food system,” says Kelly. “You can’t look at food production and sustainability in isolation from each other, they are interlinked. The food chain is a complex system with a lot of moving parts and there is a range of aspects to sustainability including healthy food, innovation and cost competitiveness. A big part of the strategy is around supply chain transparency and ensuring an equitable return for all players.”

Minimise food waste

Circularity is another important theme for the industry with the new deposit return scheme for beverage containers to be implemented shortly. “The circular approach is being adopted across the industry,” says Kelly. “The industry is making great efforts to minimise food waste as much as possible. And if companies can’t eliminate waste the next step is to see what value can be extracted from it. Failing that, it can be used for energy production.”

Innovation is critical to achieving sustainability ambitions. “Innovation is part of the industry. For example, at the business to consumer end it is very much focused on consumer insights and translating them into products that people want to buy. They are innovating to develop new ‘better for you’ products and functional foods, to reduce packaging, improve margins and move up the value chain.”

That requires highly skilled people. “The industry is making very significant investments in upskilling,” says Kelly. “This is part of our overall skills strategy for the industry. This is a source of competitive advantage. The industry is in competition with other sectors for skilled staff at all levels. Investing in skills will help it to retain talent and attract potential recruits to an interesting and dynamic sector with strong growth potential.”

Kelly points out that the industry demonstrated enormous resilience during Covid-19 and that is a trait that will be required as it deals with the continuing fallout from Brexit. “The unfortunate reality is that the UK has left the EU, and we are starting to see industry food regulations diverge already. Both the EU and the UK are introducing more legislation and regulation. They may have the same policy objectives, but they have decided to get there in slightly different ways. Companies have to deal with two sets of regulations and costs are only going to grow. The UK hasn’t implemented most border controls yet and we have to be concerned about what will happen when they do come in.”

The Northern Ireland protocol is another significant area of concern. “There are very valuable supply lines running between the two parts of the island. It is vitally important that a resolution is found that ensures there is no hard border on the island of Ireland.”

Turning to the issue of inflationary pressure, Kelly points out that the industry has been dealing with it for at least the past year and the war in Ukraine is exacerbating the problem. “There is only so much the industry can do to mitigate the issue and cost increases have gone beyond the level that can be absorbed.”