Seanad debates

Tuesday, 15 November 2016

Commencement Matters

Brexit Issues

2:30 pm

Photo of Robbie GallagherRobbie Gallagher (Fianna Fail) | Oireachtas source

I want to raise the issue of Brexit and, in particular, the effect it is having on the mushroom industry in Monaghan and elsewhere. The mushroom industry provides a stark warning to the rest of the country's economy about Brexit and the damage a sustained weakness in sterling can inflict. It really is the canary in the coalmine for the Irish agribusiness.

Ireland's mushroom industry, the fifth largest in the European Union, has an annual production worth €120 million and employs 3,000 people throughout rural Ireland. One in every two mushrooms sold in the UK is Irish, while 43% of production costs are labour costs. Our mushroom growers rely on the UK for approximately 80% of their sales.

However, they have been losing money since the referendum sent sterling into a downfall. Several mushroom farmers have already gone out of business with the loss of 130 jobs, most of them in rural Ireland. A further six mushroom farms are under serious pressure with the potential loss of a further 300 jobs, again all located in rural Ireland. The potential impact of further closures is enormous, especially when one considers many of these jobs are heavily concentrated in counties such as Cavan and Monaghan.

Producers pinned their hopes on the Government's so-called Brexit-proof budget. They have now joined other business groups in criticising it as totally inadequate. They say they are not looking to be propped up indefinitely, but that they certainly need some help in the short term. Contracts were entered into when sterling was strong. Now they just need to get into next year when these contracts will be up for renewal again.

The mushroom industry made a detailed presentation to the Joint Committee on Agriculture, Food and the Marine in advance of the budget, which I attended. The industry pinned its hopes on measures being introduced which would alleviate its difficulties. The committee made recommendations along those lines but, unfortunately, none of which was implemented. Mushroom farmers have called for a cut in the level of social insurance tax levied on employers and the provision of emergency funds to exporters. Instead, they were offered cheaper loans and small tax relief measures.

It is a concern that exporters who shift 44% of their product to Britain are reporting they are starting to encounter some issues in accessing credit from banks concerned about their currency exposure. Some firms with a high proportion of sales in Britain are also considering shifting their production there with obvious implications for jobs on this island. The Minister for Finance, Deputy Michael Noonan, suggested the budget measures would likely not be the last to cushion the impact of Brexit. He spoke about the need to wait until he sees the shape of Britain's exit negotiations next year. This will be cold comfort if exporters have already closed down.

The lack of breathing space in the budget is in fact likely to speed up the increased mass closures. Options from the industry have been suggested, including the provision of more funding for firms breaking into new markets, a partial State guarantee of their credit exposure to suppliers, as is available in other countries, and the reactivation of a fund set up in 2008 that offered up to €500,000 to viable firms facing exceptional difficulties.

Brexit is the greatest economic challenge facing Ireland in this generation. The outcome of the US elections adds to this volatility. The Government, so far, has shown a lack of interest in issues affecting Border areas. A serious change of direction is now needed to confront the problems we face arising from Brexit. Our retail sector is also suffering, underlying no country is more affected than Ireland, and no part of Ireland is more affected than the Border counties, as a result of Brexit.

Some people believe Brexit will not happen until Article 50 is triggered. If one lives in the Border counties, one knows Brexit is here now. Without action, thousands of jobs will be at risk.


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