A larger share of food and drink companies are putting hedging or pricing arrangement into place as we near Brexit.
This is according to the latest Business Monitor from Food Drink Ireland (FDI), the Ibec group representing the food and drinks sector.
The Monitor includes an analysis off food and drink responses to a recent Ibec Brexit survey of businesses across Ireland.
It found that 59% of food and drink companies had a hedging or pricing arrangement in place (up from 51.5% in summer 2016) compared with 35% of businesses generally.
The most common elements of contingency plans for food and drink companies are focusing on new geographic markets outside of the UK; diversification of business into new products; alternatives to transit goods through the UK, and sourcing strategies for materials.
From an export perspective, 50% of food and drink companies said Brexit would have a negative impact on the value of export sales (an increase from 42%) compared with 28% of businesses generally.
The biggest impacts that the UK leaving the EU would have on respondent’s businesses in the food and drink sector were the cost of customs compliance; exchange rate movements; value of export sales, and volume of export sales.
The deeply integrated nature of food and drink supply chains across Ireland were reflected in responses to a question on the impact of Brexit on the island of Ireland.
89% expressed concern about increased custom and certification procedures (60% for all businesses) and 72% highlighted the risk to all-island supply chains, including rules of origin (43% for all businesses).
FDI Director Paul Kelly said: “Food and drink companies are actively engaged in Brexit planning.
“With 35% of food and drink exports going to the UK and further 33% destined for the rest of the EU mainly via the UK land-bridge, it is clear they are more worried than other business sectors even though they are better prepared.
“Government must implement policies to help mitigate the risks facing the sector by addressing cost competitiveness in the economy and helping companies innovate and improve productivity.
“FDI continues to call for Brexit policy measures to support and protect Ireland’s most important indigenous sector including a transition period of sufficient duration; an ambitious EU-UK future trade agreement that avoids tariffs, TRQs and regulatory divergence and no hard border with Northern Ireland.
“There is also a compelling case for exceptional state aid support to minimise the economic fallout arising from Brexit.”