Oireachtas Joint and Select Committees
Monday, 29 March 2021
Seanad Committee on the Withdrawal of the United Kingdom from the European Union
Impact of Brexit on Business Sector: Discussion
The agenda for today's meeting is the impact of Brexit on Irish businesses, helping Irish businesses to deal with Brexit through supports, and life beyond Brexit with opportunities for Irish businesses.
I must read a note for our witnesses. If witnesses are giving evidence from within the parliamentary precincts they are protected by absolute privilege in respect of the evidence they give to the committee. This means that a witness has a full defence in any defamation action for anything said at the committee meeting. However, witnesses are expected not to abuse this privilege and may be directed to cease giving evidence on an issue at the Chair's direction. Witnesses should follow the direction of the Chair in this regard and they are reminded of the long-standing parliamentary practice to the effect that, as is reasonable, no adverse commentary should be made against an identifiable third party or entity.
Witnesses who are to give evidence from a location outside the parliamentary precincts are asked to note that they may not benefit from the same level of immunity from legal proceedings as a witness giving evidence from within the parliamentary precincts and may consider it appropriate to take legal advice on this matter. Privilege against defamation does not apply to the publication by them outside the proceedings held by the committee of any matters arising from the proceedings.
Members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment or make charges against a person outside the Houses, or an official, either by name or in such a way as to make him or her identifiable. I remind members that they are only allowed to participate in this meeting if they are physically located on the Leinster House campus. In this regard, I ask all members, prior to making their initial contributions, to confirm that they are on the grounds of Leinster House.
Members participating in the committee meeting from a location outside the parliamentary precincts are asked to note that the constitutional protection afforded to those participating within the parliamentary precincts does not extend to them. No clear guidance can be given on whether or to what extent their participation is covered by absolute privilege of a statutory nature. Therefore, if they are directed by the Chair to cease giving evidence on a particular matter, they must respect that direction. There can be ongoing Microsoft Teams and ICT issues that are being worked on by staff so I ask participants to bear with us. As is often the case with meetings being held remotely, we can come up against some glitches but I ask the participants to bear with us.
We are very pleased to have representatives from Enterprise Ireland here today. With us are Ms Julie Sinnamon, chief executive officer; Ms Rowena Dwyer, department manager, policy planning and Government relations; and Mr. Giles O'Neill, department manager, Brexit unit. I invite Ms Sinnamon to make the opening statement on behalf of Enterprise Ireland. I thank all three witnesses for their attendance at our meeting today. It is very much appreciated.
Ms Julie Sinnamon:
I thank the Chairman and the members for inviting me here today to discuss the withdrawal of the United Kingdom from the European Union and how Enterprise Ireland is supporting Irish enterprise during this period. As the Chairman said, I am joined today by my colleagues, Giles O’Neill, who is head of the Brexit unit, and Rowena Dwyer, head of policy at Enterprise Ireland.
Most of the members will be familiar with Enterprise Ireland but our remit is the development and growth of Irish companies in world markets. Working in partnership with client companies, the agency assists Irish enterprise to start, grow, innovate and scale in export markets.
In addition to dealing with the impact of Covid-19, Irish enterprise continues to deal with the challenges presented by the UK exit from the EU. Since the referendum in June 2016, Enterprise Ireland has developed and launched a wide range of supports and initiatives to enable Irish business to plan and take action to respond to the opportunities and risks presented by Brexit. During this period, Enterprise Ireland has paid €121 million in supports to the agency’s most Brexit-exposed client companies.
Given the significant concerns relating to customs issues, as part of the Government’s July 2020 stimulus package a €20 million Ready for Customsinitiative was announced to provide companies with a €9,000 grant to support the cost of staff to support customs clearance. To date, 828 companies, totalling €11.6 million in grants, have been approved funding.
To further support companies to prepare for Brexit, in October 2020, Enterprise Ireland launched a Brexit Readiness Checker. This online resource allows companies to undertake a quick check on their Brexit readiness and provides guidance on what steps they need to take now. Since January 2021, over 1,100 companies have undertaken this assessment.
In August 2020, Enterprise Ireland undertook a Brexit survey on the national PMI population, that is, manufacturing and internationally traded service companies. The results indicated at that time 42% of companies were fully or significantly ready for Brexit when measured against their four key priority areas.
The good news is that, by the end of 2020, this population of companies reported that 80% had taken action to prepare for Brexit. The trade agreement reached by the UK and EU in December 2020, facilitating tariff-free trade in goods between the two trading partners, was a positive outcome as the potential for significant damage to Irish enterprise arising from a no-deal outcome was avoided.
However, the EU-UK Trade and Cooperation Agreement has fundamentally changed the trading relationship between Ireland and the UK, impacting directly on how businesses and sectors operate in the UK. These changes have the potential to impact smaller businesses significantly, due to their limited bandwidth to incorporate new trading requirements into their business while also trying to sustain and grow their customer base. Notwithstanding this, the UK continues to be a strategic partner of importance for Irish companies. While Enterprise Ireland clients are continuing to diversify their export markets, the UK market remains the largest export market for Irish companies. In 2019, that accounted for 31% of total client exports, at €7.9 billion.
Despite the challenges presented by the new EU-UK trading relationships, and showing the resilience of the Irish enterprise base, a recent survey by Enterprise Ireland showed that 89% of companies see future opportunities in the UK and 83% report that their strategy is to grow exports to the UK. Enterprise Ireland remains committed to working with client companies to assist them to sustain and grow their business, both in the UK and through market diversification.
Trade flows to the UK are changing. Recently published January 2021 trade statistics indicate that the volume of trade between Ireland and the UK is not operating at normal levels. Challenges of complying with customs requirements and stockpiling of goods in quarter 4 of 2020 in preparation for Brexit, substitution with goods from other countries and a reduction in trade volumes due to Covid-19-related restrictions have been reported by traders as contributing to this fall in trade. While the increase in direct connectivity to the European Continent is welcomed and the response of the shipping industry in increasing capacity was unprecedented, the use of the UK landbridge still represents a preferred option for many companies due to its strategic advantages of speed and cost for companies.
Initial engagement by Enterprise Ireland with companies indicates that client companies are adjusting to the new trading relationship, albeit with challenges in the form of increased costs, delays and supply chain uncertainty. The impact on trade flows, and further potential barriers to trade resulting from the full phasing in of UK checks and controls on imports over the coming year remains uncertain. Enterprise Ireland's Brexit team continues to actively engage with companies to understand their needs and to further develop information and events to respond to them.
As previously mentioned, Enterprise Ireland clients use the scaling opportunities within the UK as a platform to diversify their global footprint into the eurozone. For Irish companies, diversification of their global footprint increases their resilience to market shocks. To support Irish companies to diversify markets beyond the UK, Enterprise Ireland developed its eurozone strategy in 2017 to grow exports into this region by 50% by 2020.
Through the agency’s six offices in the eurozone, including the Munich and Lyon offices, which opened in 2019, Enterprise Ireland’s team is actively connecting with buyers in the marketplace and linking them to Irish companies in these sectors. By 2019, client exports to the eurozone had grown to €5.6 billion, up from €4.1 billion in 2015, making this region the second largest market by value for Enterprise Ireland clients.
Enterprise Ireland clients are optimistic about future market opportunities in the UK market. Irish enterprise has proved many times over in every corner of the world its flexibility, innovative capability and resilience and will find a way through to recover and grow. The UK market will continue to be a key part of this.
The introduction of regulatory and customs checks arising from the changed trading relationship with the UK brings additional costs for Irish exporters, many of whom are operating in low margin sectors. It is very important, therefore, that companies have a renewed focus, supported by Enterprise Ireland, on improving competitiveness across all aspects of their business.
The agency’s message to companies in respect of the new trading relationship with the UK remains the same: act now, get informed, get support and take decisions, both in the immediate and longer term, to maximise opportunities and manage the challenges presented by the changed trading relationships. Enterprise Ireland will assist companies on this journey by driving innovation, competitiveness and internationalisation.
I welcome any questions and would like to thank the committee for the opportunity to address it this afternoon.
I thank Ms Sinnamon for that most comprehensive opening statement. I will open the discussion to committee members to pose whatever questions may arise from that opening statement and any other areas they might want to touch upon. Following that we might have a back and forth between members and the witnesses. I will leave it to Ms Sinnamon to direct responses from her own team depending on who is best placed to answer those questions.
I will kick it off. Ms Sinnamon mentioned the customs issue. We have been meeting as a committee for a number of months now and we have engaged with the Irish Road Haulage Association, the ports, IBEC, the Irish SME Association and business organisations. The customs issue seems to crop up everywhere as a big issue for businesses, and specifically, the flow of trade in and out of our ports, the additional paperwork, the cost of that and perhaps the lack of expertise. I note from the opening statement that Enterprise Ireland has put in place a customs grant to help companies afford this extra expertise. I would welcome the views of the witnesses on the issue of trade at the ports. We have received complaints that communication between the Revenue, the HSE and the Department of Agriculture, Food and the Marine is not where it could be to streamline trade coming in and going out of the ports. I am wondering if Enterprise Ireland has come across the same issue with its clients and whether it has engaged with any of the three entities mentioned to try to improve the system for businesses.
As Ms Sinnamon stated in her opening statement, we all accept that things have changed significantly. It is a completely different trading environment. I am most heartened to learn that Enterprise Ireland's recent survey shows that 83% of its clients report that they still have a strategy to grow their exports into the UK. That shows that there is still a lot of positivity among Irish businesses and Enterprise Ireland's clients. Ms Sinnamon touched on the issue of trade not being "normal", if I can put it that way, in the run-up to the end of last year because of stockpiling and Christmas and businesses perhaps getting trade in and out before the rules changed. When that beds down and things settle, is there any indication of what the true picture might be, in terms of a drop-off in trade between Ireland and the UK?
My final question to Ms Sinnamon and her team concerns exploring new markets. The food and drink and agriculture sectors were going to be the most impacted by Brexit. Geographical proximity to market is important. I appreciate that it has been a short enough period, but what success has Enterprise Ireland had in opening up new markets for Irish businesses? How many Irish businesses have successfully made that leap to exporting to new markets?
Ms Julie Sinnamon:
I will make some comments on the new markets and the picture when it settles down, in as much as we know.
I will ask Mr. O'Neill to speak to the first question on the communication side and the various parties. At this stage it is very difficult to project where it will settle exactly. There was certainly quite a drop in trade in January and that had recovered significantly in February. That is anecdotal. Many companies had stockpiled, as I covered earlier. Until the UK fully implements all its controls, it is not fully known what the full indications will be. With every additional piece of paper to be filled in for companies, there is an additional cost. There is a competitiveness issue and Irish companies will have to drive their competitiveness to ensure they can cope with the additional cost going into the market.
On the eurozone, the figures went from €4.1 billion in 2015 to €5.6 billion and we were well on track to hit that 50% increase in the period. We had great success with companies going into the eurozone. However, from the figures we see the UK is and will continue to be a really strong and positive market for Irish companies. It is not proposing to walk away from it, and this is why driving on the competitiveness agenda is really key to covering any additional costs. Mr. O'Neill might now speak to the issues between the various parties at the ports.
Mr. Giles O'Neill:
It is fair to say everything has been tested. The process has tested our communications and many organisations and stakeholders have really grasped that. The level of communications across stakeholder groups has been immense with respect to preparation and that will continue. I am involved with a number of stakeholder groups and there is a two-way process of communication in raising issues and getting them resolved as quickly as possible. A number of measures have already been taken this year in trying to improve matters and I am sure a number of measures will be taken in future.
This really required people to get on top of things very quickly. The more experienced exporters and importers were able to do this and some of the less experienced people who had just been dealing with the United Kingdom found it very difficult. The amount of data and the timely receipt and communication of the data, as I said at the start, tested everybody. It will only continue to improve as people get more used to the systems required.
Ms Julie Sinnamon:
I have another point on the diversification agenda. The capital investment scheme, which was announced at the end of 2020, with a first call of €70 million, is aimed at the primary processing group of food companies in particular. That scheme is really important in helping Irish food companies specifically with the diversification agenda to invest in capital equipment so they can go to markets further afield. The scheme closes on 15 April and there will be significant demand from companies to make those investments and allow them to go further afield with market reach.
I am speaking from Leinster House but as the witnesses might judge from my accent, I am from a Border county and I live in Monaghan. My camera is not working but perhaps I am doing everyone a favour with that technical fault. I welcome the witnesses and thank them for taking time out to be here to discuss this very important matter.
Ms Sinnamon has been to the Border counties many times and knows food production, particularly in Cavan and Monaghan, is a very important and key industry for us.
Many jobs depend on it. I wonder about the long term. It is difficult to get a true picture, as Ms Sinnamon touched on earlier, because many businesses were trying to adjust to Brexit and then Covid came along. Many of them are probably still not trading in full flow because of that. Bearing in mind that food production is so important to the Border region, does Ms Sinnamon see any major long-term difficulties? What future does she predict, insofar as she can, for mushrooms or poultry in counties such as Monaghan and Cavan, given that the UK is their main market? Will they be able to adapt? Currency fluctuations and so on make it difficult to make predictions but, by and large, the UK marketplace is the only show in town for many in the Border counties because the shelf-life of mushrooms, for example, is short.
In the 18 months or two years leading up to Brexit, Enterprise Ireland encouraged businesses to find out what supports were available. Ms Sinnamon might go over the statistic with me if she has it to hand but I read somewhere that a significant number of companies have yet to engage with Enterprise Ireland on Brexit. What is causing this lack of engagement? That will be worrying if it continues. Covid is probably hampering businesses because they may believe they should wait until the pandemic is over before engaging. There is always an excuse not to engage. How concerned is Ms. Sinnamon about that? What are the long-term prospects of the Border region given that the UK is its main marketplace?
Ms Julie Sinnamon:
I thank the Senator for the questions. Food is the largest sector of Irish enterprise, not just in the Border counties. It is important not just because of its contribution to exports from Irish companies but also because the bulk of the food companies are regionally located. That is particularly important in all this. Looking at the Border counties, the poultry and mushroom sectors have been particularly successful in Monaghan and the UK has been a key target market for them. The UK is not self-sufficient in products such as mushrooms. A large amount of poultry is produced for the domestic market so there are issues of import substitution. A strong focus of chicken processing has been on the local market, whereas mushrooms in particular have gone into the UK market, in which we have a strong position. Exchange rates are important in that regard and continue to drive the efficiency of the sector. That is the reason for schemes such as the Border enterprise development fund, which was about supporting companies in the Border counties to invest in efficiency programmes and capital investment to drive further cost out of the business. The whole lean processing agenda is really important at this time as those additional bureaucracy-related costs arise.
The figures I had showed a relatively low level of engagement initially. I gave a figure of 42% for engagement by August of last year. By the end of the year, that had increased significantly and stood at 80% in December.
One of the big issues, which is very understandable, is that there were so many deadlines for Brexit which came and went. A bit like the Grand Old Duke of York, we went up the hill and down again and, at the end of the day many, people, despite all of the communications, still believed that if a deal was done there would be a continuation of the existing relationship which is clearly not the case. That caused many companies not to engage, but the shift from 42% to 80% by the end of 2020 was really significant. The delay in the UK implementing many of the new regulations has pushed out the inevitable for many companies and has stopped people making decisions in terms of pushing things forward. However, the UK will continue to be a critical market for many companies, including mushroom companies in the Monaghan region. There is a high level of engagement and that has been the case from the start, particularly for the large companies that have more bandwidth. Grants such as the ready for customs grant have been well taken up and while there is still scope for more companies to draw them down, there has been strong demand to date.
Mr. Giles O'Neill:
Ms Sinnamon has covered it well. Believe me, there was nobody more anxious about the statistic referred to that one in five companies had not done anything towards the last quarter of last year. That was keeping everybody awake at night. Now we find that four in five companies are well on the way and only one in five is not. That was challenging but, as Ms Sinnamon stated , there were two main reasons. One was Covid and the fact that companies were otherwise distracted and had other priorities. The second was the outcome of the negotiations, which we probed in depth. Deal or no deal, there were going to be customs requirements but there was a mistaken belief out there that if a deal was done, it would all go away but that was not the case. That is why we geared up in quarter 1 to support those companies that needed help to get things sorted out as they were trading.
Ms Rowena Dwyer:
The Senator asked about the long-term future for these sectors in the UK market. The huge concern prior to 31 December was the potential for a no-deal outcome and tariffs applying to food products in particular. That was avoided, thankfully, with the agreement and now the focus is on how these companies can improve their competitiveness and consolidate their position in the UK market. The mushroom sector is a very good example in terms of the advantage it has vis-à-visproximity to market and who it is competing with. The concerns that the Senator has raised are absolutely correct but the challenge now is not the existential one we thought it might be six or nine months ago.Now the challenge is around how those companies can continue to innovate and be as competitive as possible in order to maintain, as far as possible, their position in the UK market.
I welcome our guests to the meeting, which has been very informative so far. Senator Gallagher has already touched on my first question, which I want to tease out a little further with the witnesses. Ms Sinnamon indicated us that 828 companies have availed of the €9,000 customs ready grant. Do we have any idea of the total number of companies that could avail of that grant? Ms Sinnamon also mentioned that 1,100 companies had checked in to the online checker, which suggests that approximately 300 companies have not availed of the €9,000 grant. Do we know why that is the case?
We are hearing again today that smaller companies are most impacted, which is probably naturally the case. From our point of view, what can Enterprise Ireland offer to those smaller companies or are there any special packages for such companies most impacted? This has come up in our previous discussions with other employer and business organisations.
My final question is on diversity which our guest speakers have spoken about and is great to hear. Generally, what kind of company has Enterprise Ireland been involved with in respect of this diversity? It is also great to hear that there has been growth of €5.6 billion compared to €4.1 billion but what type of companies are involved in that growth? Our witnesses have stated that 31% of total exports were to the UK with a value of €7.9 billion in 2019 and with a value of €5.6 billion to our EU neighbours as of now. Can our witnesses give the committee some idea then of the companies that are involved in these exports? I thank the Chairman.
Mr. Giles O'Neill:
Certainly. On the Ready for Customs grant, the Senator may have heard these numbers before, but last year we were communicating hard in saying that the number of customs declarations was going to increase from 1.6 million annually to 20 million. This meant, on a simple calculation, that in respect of customs clearance capacity, the industry needed to employ an additional 2,000 people, which figures the Senator may have also heard. I looked this morning at the number of additional people that we have supported so far, which is 705, with approved and ratified grants to go into the sector.
To be clear, the people best positioned to do this work are often involved in freight logistics and customs clearance because they are the closest people to it and have the data that is required. Not every company needs to take on somebody to do this. Many of these companies gave this work out to a third-party, which is the right thing to do and makes commercial sense.
The Senator mentioned the Brexit Readiness Checker and made a connection between the Ready for Customs grant. Yes, some of the companies that would have used the checker would have taken advantage of the grant but many would not have. The Brexit Readiness Checker was designed and devised to enable companies to look across their business in a number of different areas to see if they were ready or not, to provide a gap analysis and a direction towards supports. There is not an intrinsic link between those two products. I hope that answers the Senator’s question.
Ms Julie Sinnamon:
In dealing with the Senator’s figures on the UK and the diversity issue, the UK figure was €7.9 billion which represented 31%. Interestingly, if one looks at those figures for 12 to 15 years ago, the UK represented 42% of our total exports. Over that period we reduced the overall dependence on the UK market and grew this market by approximately 50% but we grew the rest of the world at a faster rate. That has been the specific focus of our work with companies in the past number of years. Prior to 2016, we felt it was in the interests of Irish companies to have a more diversified and balanced portfolio of markets. Therefore, in 2015 we set a target of exports into the eurozone of €4.1 billion and had it not been for Covid-19 we would have been in a strong position to hit the €6 billion market figure by the end of 2020. We are currently collecting the figures and it will be challenging because all of the figures have fallen back quite considerably in that year and I do not believe we will hit that figure.
As to the companies themselves, we have developed programmes such as Enter the Eurozone and have set specific targets for companies that were in the UK that we considered had products and services that are suitable for the eurozone, and we have moved to get these companies under those programmes. This was also intended for companies that were in one eurozone market to scale up and move into additional markets within the eurozone.
Those are companies of all sizes, but particularly smaller companies, many of which were going in for the first time, and also companies across all sectors. It was everything from life sciences, to construction to engineering companies and companies of different sizes within a sector.
The comment I made on the implications of Brexit for smaller companies specifically was driven by the fact that many large companies have the bandwidth and corporate teams to be able to deal with these issues. For smaller companies, it is just another additional thing to be piled onto small management teams that are already stretched. That is why it is particularly important for these companies. They have been the focus of much of the work we have done over the last three to four years through all the clinics around the country and all the communications, to try to get the smaller companies that did not have the bandwidth to take action.
I thank the witnesses for the presentation. My first question follows on from Ms Sinnamon's last point and Senator Wall's question. We will produce a report at the end of this discussion. Are there specific recommendations Ms Sinnamon would like to see regarding the experience she has had with those companies for which exporting to the UK was the easy option and which have now looked at entering the eurozone? Are there specific measures Ireland can take to further support those SMEs to look at exploring the eurozone as an option?
Second, I know Enterprise Ireland has opened an office in Manchester and is obviously looking at increasing trade with the north of England. How is that proceeding?
The third question is on a specific issue which I am sure Enterprise Ireland is aware of, the problem with flour. We have been importing significant amounts of flour. There are issues that have arisen as a result, including a potential price increase in respect of bread and bakery products. It would probably make a great deal more sense now to look at Irish mills starting to grind more flour. Does Enterprise Ireland have any thoughts on flour manufacture and milling?
Ms Julie Sinnamon:
The first question was about measures to increase the focus on the eurozone. Ultimately, we have to effect a change in mindset whereby companies will think export and think of the eurozone as an extension of the domestic market. For many years, because of common language, proximity and so forth, the UK was that market. There is a changed relationship with the UK. Irish companies that have gone into the eurozone over the past three to four years have been quite surprised at the ease with which they have been able to do business there. That is why programmes such as Enter the Eurozone are very important, whereby there is a peer group of companies going into the marketplace at the same time. Excellent work is being done with Business School Berlin, which is working with all these companies to help them to put plans together. I believe that must be scaled up over a period of time. We have completed a couple of those at this stage. It is about getting more focus on the eurozone and the opportunities, and working with companies to effect that change. We are achieving success and once one gets a little momentum that will continue.
I believe in continuing that journey. We have tried and tested it. It is now a very effective programme. There will be a need to increase resources over a period of time to help in more eurozone locations. We opened offices in Munich and Lyons. Those were markets where we previously had one Enterprise Ireland office in the country. However, it is very different supplying the market intelligence within the Paris area as opposed to that in the south of France and Lyons. Over a period there will be a need for more presence to be able to support that.
We opened the office in Manchester for the same reason. We felt that the focus in the UK was too south-east-centric.
We felt companies, particularly in areas like construction and engineering, could go after opportunities in the north of England and Scottish markets where there are new railway and infrastructure development projects. That was specifically designed to help Irish companies to target that area. Interestingly, we used to have a market in Manchester many years ago but we closed it. We have come full circle. The feedback and the success of companies to date in the greater Manchester region has been positive. We certainly would be pushing companies to put a presence on the ground in these markets. Effectively what we are doing is what we have been encouraging companies to do, namely, to be close to companies in that region.
Ms Rowena Dwyer:
One of the most challenging issues which has arisen for a relatively small number of companies and sectors is that of rules of origin. All companies are making sure they are abiding with the rules of origin. In some instances, there are tariff implications arising from it. Flour is a major issue. It is a feature of trade agreements that these rules of origin have to be followed.
It is really about what potential investments can be made and how companies can be supported to make the adjustments to this challenge. It is looking in the short term at what support can be given to companies to address their supply chain configurations. It is then about looking in the longer term at the potential options for funding such as the Brexit adjustment reserve. Has it the potential to support enterprise and sectors impacted by Brexit to offset or make adjustments to continue trading in a competitive manner? It is not a straightforward answer but it is about looking at how companies can be supported to make investments to address this issue.
The options around flour are about changing supply chains. None of those are immediate, however. Companies will have to be supported to do so.
Taking the flour sector - there are other areas like steel and so on - if there were specific policy recommendations for the committee to make, what would Ms Dwyer suggest? I appreciate there are many variables in this but we will be reporting to the Government on some of these soon.
Ms Rowena Dwyer:
Without being too specific, it probably is about looking at the Brexit adjustment reserve and seeing what scope is within that to support companies to make investments, whether they are capital or current. That is definitely the objective of the fund. It is also the Government's broad objective to utilise it and see what flexibilities might be available to make those types of investments.
Ms Sinnamon already mentioned the capital investment scheme for food processing. That is specifically for Annex 1 and the processing of primary agricultural products. Looking at whether there are options in that type of area for the Brexit adjustment reserve to support potential capital investment and enterprise is the way forward.
Ms Julie Sinnamon:
Looking at this opportunity might be useful as an initial piece of work that could be done. The rules of origin impact on flour has been an unintended consequence.
With that might come opportunities, just as the whole Covid situation has given rise to opportunities for people to do things that we previously would have thought might not be appropriate. With that change and the lack of competitiveness it brings in terms of the cost, there is probably work to be done to look specifically at the issue and to support companies to examine the feasibility of doing further processing in Ireland that previously would have been done elsewhere.
I am pleased to have an opportunity to speak with the CEO, the manager for planning and Government relations and the people working on start-ups in Enterprise Ireland. It is great that we get to speak to them. I am grateful to the Chairman, Senator Chambers, for creating these opportunities. As the saying goes, one cannot beat talking. We are not meeting physically so it is important that we get to hear different opinions.
I am the spokesperson on enterprise, trade and employment and on rural development. I will focus on those two areas and how they marry with the overall issues. Is there a very clear one-stop shop for business supports? As Senator Wall mentioned, there has not been a massive take-up of the existing supports by businesses.
I raised an issue with the Minister for Foreign Affairs, Deputy Coveney, when he attended the committee's meeting. We have all the statistics now on what we bring in from England. I know we have trade agreements coming down the line, but we can also become more self-sufficient because we are in a new climate era and we are going to have a significant climate action Bill under which every sector will be obliged to meet its targets. Every Department will also have to meet its climate targets. The amount we import and what we do not do ourselves in this country will affect the figure considerably. We have already discussed the fact that 95% of flour is imported from England.
I wish to make two points about being more self-sufficient and creating more employment and enterprises. If we had stronger labelling in Ireland, it would help differentiate between what is Irish and what is imported, and possibly increase sales. Consumers have a big role to play in that regard. I take issue with the way we label goods. We often import produce from abroad, chop it up and process it in some shape or form to a minute extent and then it looks like it is made in Ireland. Labelling will have to be an important part of the work of Enterprise Ireland if we are serious about supporting indigenous businesses when it comes to produce. I would welcome the thoughts of the witnesses on that because it is something I have raised with the Tánaiste, Deputy Varadkar, about Bord Bia and its labelling. It is a big part of supporting enterprise. If products are not labelled as Irish, how can people support Irish enterprises?
We must examine the possibility of having a grant for growing potatoes. Some 80,000 tonnes of spuds a year are imported from England and 30,000 tonnes of seed potatoes are imported from Scotland. I know traffic cannot just be one way if we want them to buy from us as well, but we must figure out how we can create more jobs and business enterprises from growing more spuds and becoming more self-sufficient in some of our food staples. We import 52,000 tonnes of apples, 47,000 tonnes of onions and 23,000 tonnes of cabbage. If one shoves them in the ground, they nearly grow themselves. I am not a green-fingered person but this is low-brow growing. We really need to look at that because it would bring young people back to the land. I know I sound like a pure farmer, but we have two things; agriculture and tourism. One could say tech is a third area but it is global and it does not provide as many jobs. We must look at everything and the way we are doing everything must change. The responsibility for the Climate Action and Low Carbon Development (Amendment) Bill is no longer the preserve of a section of one Department, it goes across every Department and the Department of Enterprise, Trade and Employment will have to take it into account as well. Food security is a major issue and will be in the future, irrespective of climate. That is the case whether one believes in climate change or not. I would love to see Enterprise Ireland looking at that.
Manufacturing is another area we must examine.
We could not source any personal protective equipment gear in Ireland. Women all over the country were pulling out sewing machines trying to make a bit of a mask. Is there no manufacturing left? Does everything have to be made in Outer Mongolia, Indonesia and China given that we all wonder about the quality of the products and the pay of the workers in those places? We need to look at this as a nation. We are the Emerald Isle and we could be the greenest country in the world. As a small island with a small population, we could do this better. It would be great because it would attract more business to Ireland and more tourism. It would be a win-win. People come to Ireland expecting everything to be done in a fair and just way, workers to be treated right and green space. If we grow more food, we will have more biodiversity. So many positives can be brought from the Brexit deal if we do it right and look at our enterprises in this way. Labelling will play a huge part in this.
We have no plastic recycling in Ireland. We export all our plastic. The first step will be increased recycling in Ireland and the second step will be to reduce the amount of plastic waste. These are measures that money will be put towards and we need to think in that way. I do not know whether the witnesses have seen the waste management plan the Minister, Deputy Ryan, brought forward and the new structure of our economy set out in it. There will be jobs in this, as I am sure has been flagged with the witnesses. I raise these issues because I feel quite hopeful in some ways about the opportunities Brexit has also brought to create more jobs, including more sustainable jobs, and the greening of our country in general.
Ms Julie Sinnamon:
I will kick off with a couple of specifics and then bring in Ms Dwyer on the agricultural side. With regard to the take-up of supports, earlier I gave a figure of €121 million. Since 23 June 2016, when the UK voted for Brexit, the three pillars of our strategy to support Irish companies have been innovation, competitiveness and internationalisation. While we look at times at Brexit supports, the take-up of the customs grants and the number of people using ready reckoners, everything we have been doing has been to try to make companies more competitive when going into the UK or any other market they have been in, and trying to broaden the global footprint to get them to look at new markets. The demand for competitiveness, the innovation agenda and all of these products and services has been strong and growing. They do not necessarily get listed in the Covid product schemes when people are looking at some of the more immediate specific schemes but for us all of this investment is about helping companies deal with Brexit.
Specifically on personal protective equipment and the issues that became obvious in the wake of Covid, with masks being one of them, the EU brought in a Covid product scheme. We have had a strong flow. Many of them have not been announced but significant investments are being made in companies to produce products in Ireland that previously were all coming from China, the Far East and other parts of the world. One of the legacies of this has been that it has raised issues of self-sufficiency for products that were all being imported. We are working on an active group of investments with companies in response to Covid manufacturing projects to produce products largely focused on the Irish market, with some of them going into the UK market and further afield. There will be significant capacity here that would not have been here previously.
On the issue of recycling, one of our companies in Castleblayney, the Shabra Group, is in the plastic recycling business. There is something in place but the whole issue of recycling and reusing is a much bigger agenda today than it has been previously.
Just as the climate Bill will bring opportunities, it will have an impact for every sector of Irish enterprise. It will bring challenges and will also provide opportunities for companies. We have a great group of companies, for example, on the whole energy efficiency side, that are going around the world with expertise which is equally important in Ireland.
Perhaps Ms Dwyer wants to come in on the import substitution side with regard to some of the areas the Senator has raised.
Ms Rowena Dwyer:
Some of the issues that have been raised are live and, because of Brexit, are in a focus that they have not been in before in terms of whether there are actual opportunities for import substitution for different food products. There certainly are opportunities. We are going to see changing trade patterns because of there being more challenges to trade with the UK in products that traditionally went over and back. We have already seen some of our own companies looking more at the domestic market opportunities and growing from there.
It is a long-term issue and one of balance. In regard to the food strategy that is being developed - the ten-year strategy being led by the Department of Agriculture, Food and the Marine and the Minister - one of the things it is looking at is land use, biodiversity and what the balance of our agriculture should be into the future. The challenges are always going to be down to whether something is economic to scale up and to grow.
If I could pick up on one point raised by the Senator which really links into that, it is the entire climate change issue and the opportunities that arise from it. From an Enterprise Ireland perspective, along with the rest of Government, we now have a focus on supporting companies to address that challenge, but also on supporting companies that can provide solutions and opportunities in that area, which is critical. To go back to agriculture in this regard, it is a question of supporting our agricultural technology companies to enable primary agriculture to be more emissions efficient, to reduce carbon emissions and to enable food production to be more sustainable. We have a key group of companies that are developing solutions in that area. This is about supporting them to provide more of those solutions and, thereby, to go back down the food supply chain, enabling Ireland to continue to have a sustainable primary food production sector that is critical.
The more products we buy, the more jobs we create. That is why labelling should be brought up by Enterprise Ireland. It is not just me and includes Bord Bia and other people. It is an old problem we have had for years. My sister has a very successful goat's cheese business, St. Tola Goat’s Cheese, and she has fought the labelling issue for years as a small producer. Imports are allowed to come in, they stick a Celtic cross on them and wrap it around, and it looks like they were milking the goats themselves. I know that issue of old.
This industry is a great job creator. If we look at horticulture and artisan food, they create so many more jobs per acre of land than mass farming or intensive farming. I have several friends who work in that sector, including several friends who are fruit growers. They are creating jobs at a rate of one per acre. Show me a commercial farm that is providing a job per acre. Most farmers say they are barely able to make a living for themselves out of it. There is huge scope, in particular scope for exporting quality food from Ireland. We need to look at that sector and develop it more if we are talking about enterprise.
Many more jobs could be created if we addressed land use in Ireland. If we change how we use land, it will also have a massive impact on reaching our carbon targets. At the moment, mass commercial farming has ruined the topsoil and every inch of topsoil holds thousands of kilos of carbon.
Regenerative farming and food production on a smaller scale creates more jobs and it increases our carbon sequestration. It is a really interesting aspect and I would like Enterprise Ireland to look at that. I would love to see a section of the agency focusing on sustainable or green opportunities that climate change is bringing and the solutions offered to put Ireland on the map in this regard. It is so important at this critical time. Brexit gives us the chance to do this.
I did not get the link on all the Enterprise Ireland supports to businesses.
Ms Julie Sinnamon:
We see significant opportunity in the green area. Currently we are setting up a unit to deal specifically with the green agenda and we are recruiting for a manager for that. The other staff will follow after. It undoubtedly is a significant area for challenge and opportunity. There are lots of opportunities and we believe that Irish companies can play a big part in that in Ireland and globally.
I thank Senator Garvey, and I thank Ms Sinnamon, Ms Dwyer and Mr. O'Neill for that.
Are other members offering to come in? I think we have had everybody in to ask questions who has indicated. Do our witnesses want to make any closing remarks before we wrap up?
Ms Julie Sinnamon:
I thank the Chairman and the committee for the opportunity to talk with them today. Certainly for the past three and a half years we have spent a lot of time and effort, and Mr. O'Neill is specifically managing the Brexit unit in working with companies on this. Between Brexit and Covid coming together, the past year has probably been the most challenging of times for Irish companies. We have seen, however, a resilience in the client base in being able to respond to it. There is certainly a strong commitment to continuing to grow in the UK market but the spread of markets is very important. There has been success in growing exports out of the UK, which is very important. This is about not walking from the UK but also about growing exports outside it to have a more balanced portfolio. I believe this is very important going forward. The UK is a very strong market with more than 60.5 million consumers. Very strong relationships have been built between the Irish supply base and the UK market. We also see continued opportunity in that market. The next year will tell a lot in solving the issues for companies and the full implementation of all the barriers. We are going into a new trading relationship with the UK but this does not mean we need to walk from the market. We will continue to develop and prosper in it.
I thank Ms Sinnamon. We are in agreement on that front. We are not seeking to replace the UK as a market. We are looking to move elsewhere also to see those new opportunities as we become more mobile and more global in our approach. It is very positive to hear from Enterprise Ireland that Irish businesses are still very positive about the UK market, that there are a lot of supports there, and that Enterprise Ireland has opened its Manchester office, which is a show of confidence in the UK market. We spent a long time building up strong consumer confidence in the UK. Irish products are trusted. We have the link, which is not just economic. There are so many links between Ireland and the UK that it is a relationship worth protecting and maintaining, and for developing in whatever way it develops.
Ms Sinnamon is right that we spent so long talking about Brexit and, while it has now happened, we are really only three months into this new trading environment. We have still not had the full customs requirement applied, which we expect later this year. It is still very new. It is still bedding in and there will be some teething problems. The purpose of our committee is to assess the initial impacts of Brexit. We will produce our interim report in July. The evidence that all three witnesses have given will be useful in compiling that report, and will form a significant part of the report.
On behalf of the committee members I thank the three witnesses for making themselves available for our meeting, taking questions and engaging candidly with our members. It has been very much appreciated. It has been very worthwhile and we have learned a good deal. I thank Ms Julie Sinnamon, Ms Rowena Dwyer and Mr. Giles O'Neill for their time.
In terms of any other business, we will schedule a private session for a short period to discuss witnesses beyond the Easter break. Our next public meeting will be in committee room 3 on Monday, 19 April, and will commence at 3 p.m. when we will hear from representatives of the Institute of International and European Affairs. If there is no further business the meeting stands adjourned and we will see all the members on that date.