Food sector seeks State trade credit insurance

A STATE trade credit insurance scheme, a supermarket ombudsman and grant aid are among the “urgent measures” required to protect food suppliers from unfair commercial practices and the weakness of sterling, Food and Drink Industry Ireland has said.

Responding to the publication yesterday of Central Statistics Office (CSO) trade data showing a provisional 9 per cent drop in food exports to Britain in February compared with the same month last year, the group said the continued weakness of sterling was causing food exporters massive difficulties.

Director Paul Kelly said the industry was in crisis with more than 2,000 jobs lost already this year.

He called on the Government to get EU approval to set aside State aid rules and provide aid to food suppliers. He said reductions in energy costs and the introduction of a State-backed trade credit insurance scheme were necessary to protect the industry.

The food and drink industry exports goods worth €3.4 billion to Britain, representing more than 40 per cent of food exports. “The food and drink industry is as important to Ireland as car industry employment is to Germany,” Mr Kelly said.

Meanwhile, Food and Drink Industry Ireland’s head of consumer foods Shane Dempsey said the introduction of a supermarket ombudsman and a supermarket code of practice would protect Irish food suppliers from unfair commercial practices.

Mr Dempsey’s call follows the launch of a public consultation by Britain’s Competition Commission on proposals to introduce a similar system there.

The unfair practices include delays in payments, demands for financial payments above and beyond contractual arrangements, demands to fund marketing initiatives and arbitrary changes to supply contracts.

The decline in food exports was one of the black spots in the CSO’s external trade data.

A detailed breakdown of the January data shows that the value of exports that month declined 3 per cent year-on-year, with computer equipment falling 22 per cent and electrical machinery down 51 per cent.

However, exports of medical and pharmaceutical products rose 15 per cent in January. Imports fell 28 per cent in the year to January, with the number of road vehicles brought into the State plummeting 71 per cent.

Iron and steel imports were 43 per cent lower, reflecting the slowdown in the construction sector.

The decline in the value of imports helped to lift the seasonally adjusted trade surplus to a seven-year high of €3.7 billion in February. The seasonally adjusted value of exports was €7.75 billion in February, while imports arrived at €4.06 billion.

“Given the openness of the economy, Ireland is more vulnerable than most to a decline in world trade demand,” said Alan McQuaid of Bloxham Stockbrokers.

“At this juncture it looks like 2009 will be the most difficult year for Irish exporters for some time, although the overall net trade performance will again be helped by weaker imports due to falling consumer demand.”