There are huge pressures on our sector. The causes are well-known and common to most sectors,” says Paul Kelly.

“Since the latter half of 2021 commodity prices were increasing, in part through COVID-19’s impact on supply chains, with disruption to markets and prices, and also due to elevated energy prices. Since the Russian invasion of Ukraine, costs have exploded,” he tells the Irish Farmers Journal.

Paul Kelly is the director of Food Drink Ireland (FDI), the main trade association for the food and drink industry in Ireland. Think of it as a sister body to Meat Industry Ireland or Dairy Industry Ireland, two organisations well-known to farmers.

FDI represents the interests of over 150 food, drink and non-food grocery manufacturers and suppliers.

“We have unprecedented levels of inflation on the input side, with a 300% to 400% increase in energy costs. For the cold-store sector, with a need to keep temperatures as low as -180C, energy is the single largest cost, with very little that the company can do about it.

“Households are reeling at 30% to 40% increases in gas and electricity. Our businesses, and this requires a sharp intake of breath for many relatively small companies, are facing increases of 10 times that level.

“Carbon dioxide (CO2) is a relatively small component, but at the end of last month, it experienced 500% to 600% price increases, with payment terms pulled to seven days. The pressure is real.”

A consumer response to higher food prices and also more general inflation has meant spending power has been affected, with Kelly stating that FDI is seeing notable differences in spending patterns.

A higher degree of uncertainty there is making it difficult to plan.

So how can the Government help?

“The big issue is energy costs and we look at it in two ways. General supports are welcome, but we are also conscious that our next-door neighbours in the UK and across the EU are our main export markets.

There is a need for alignment in terms of the supports our competitors in those countries are receiving, or we will lose competitiveness.

We are going to need much greater supports, which will be needed well into 2023

“We anticipate support at Government level in or about budget day based on the temporary crisis State aid put in place by the EU. However, we are going to need much greater supports, which will be needed well into 2023. It must be put in place as soon as is possible, the need is now.”

Is FDI in favour of a windfall tax on energy companies?

Kelly said that FDI is less concerned on how the revenue is sourcing money and more focused on getting money out to help food producers. “I am aware there were discussions on that at EU level at an energy council meeting last Friday.

“For us, the issue is less how revenue is sourced, it’s more about getting money and supports out to help food producers.

“FDI is part of Food Drink Europe, who last Thursday put out a statement in conjunction with Copa-Cogeca [the farm organisation/co-op organisation Europe-wide umbrella association]. It’s not just the food industry going alone.”

Energy supply critical

“We need to see prioritisation of energy to the food chain – all of the food chain. Potential gas rationing is a huge issue. We must access energy for food processing, not just for food companies, and also other critical stages of the food chain.

“Natural gas for fertiliser companies as a feedstock is needed to grow crops next year. C02 may be a small component in its own right, but it is used at critical junctures in pig and poultry slaughter and for modified atmosphere packaging.”

In terms of Ireland’s food security, Kelly says there are no simple answers or solutions.

As a food-exporting nation, with 90% of dairy and 95% of beef leaving our shores, we benefit from free-trade agreements and, particularly, the single market

“We always need to be conscious that there are only five million people in the country, or seven million people on the island. Economies of scale don’t exist here in Ireland. That must be borne in mind in terms of food availability or production of foods. It can be done, but it may be costly and would consumers be willing to pay?,” he asked.

“As a food-exporting nation, with 90% of dairy and 95% of beef leaving our shores, we benefit from free-trade agreements and, particularly, the single market. The UK pulling out of that market has created problems for food producers. We need to remember that the European Union is the largest net food exporter in the world, and that brings value back through the food chain to the farmer.

“It’s critical that we reach a resolution and get some degree of respect between the EU, particularly the European Commission, and the UK government.

“While the system is running relatively smoothly at present, there are some regulatory issues. The protocol remains the big political issue. The integrated nature of food supply chains on this island sees a lot of companies – north and south – very reliant on producers or processors across the border.

“The statement from [the EU’s Brexit chief negotiator] Commissioner Sefcovic that checks can be reduced to a handful was welcome, and gives hope for progress.”