Mr. Paul Kelly:

My opening remarks focused on agrifood exports and the impact and consequences of Brexit but it should be borne in mind that the domestic market remains the largest single market for Irish food and drink produce. I strongly agree with Senator Reilly's remarks regarding the retention of the 9% hospitality VAT rate because in addition to the grocery sector, food service and hospitality are the two other important outlets for Irish food and drink produce in the domestic market. With Brexit we will see a permanent change in our competitive position with the continued weakening in sterling and there will be additional transaction costs in areas such as customs, veterinary inspections and so on for food produce, and that is only if we manage to escape the worst-case scenario of WTO tariffs in which case the story will be completely different.

If we examine what happened in 2009, when we had the last significant weakening of sterling, there was a very large displacement of Irish food produce in the domestic market due to lower priced sterling produce coming from Northern Ireland and Britain. We are now in the situation where in one category, prepared consumer food, Irish producers have a 40% market share so we are in a minority position in our own domestic market. That is the sort of risk we will continue to face in the domestic market and in export markets too. The importance of agrifood should be borne in mind, especially on a regional basis. It accounts for 90% of agricultural output, which we process, and amounts to a payroll of €2.1 billion, which is the largest payroll of any manufacturing sector. We also purchase €3.5 billion in services as well as products in the domestic market in all parts of the country. Our key point is that we must permanently shift the cost of doing business in Ireland for the Irish agrifood sector. Central to that is that we ensure there is a single point of political responsibility for achieving cost competitiveness in the country.