Budget 2027 should address cost and competitiveness challenges in the food and drink sector

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Food Drink Ireland (FDI), the Ibec group representing the food and drink sector, has today published its Budget 2027 Submission which calls for supports to help the sector build resilience against increased costs as ongoing trade and supply disruptions impact wider competitiveness for the sector.

Paul Kelly, FDI Director said “Immense cost pressures across wages, energy, and raw materials are squeezing margins and causing a severe structural investment gap on key priority areas. Without targeted State intervention, the sector risks underinvesting in critical green and digital transitions as well as competitiveness-enhancing measures”.

He called on Government to “establish a State-Aid-based Strategic Capital Fund to accelerate the digital transformation, automation, and low-carbon transition of the Irish food and drink manufacturing base. This should build on the proven co-investment model of previous schemes but also extend eligibility to all food and drink sub-sectors. It should directly fund vital enabling technologies such as process automation and digitalisation to enhance productivity”.

FDI’s Budget Submission makes several other recommendations to help address competitiveness challenges including:

• Reducing the fixed cost component on Irish energy bills through a strategic annual subvention of some of the key policy related fixed costs on electricity bills.
• Postponing further increases in planned labour costs such as PRSI increases due in 2026 and 2027 until inflation has returned to normal levels.
• Increasing the core funding for Skillnet Business Networks by €50 million over three years to meet verified industry demand.
• Introducing a government- guaranteed, comprehensive, export credit scheme to mitigate the commercial risks that diversifying businesses face in export markets.
• Enhancing the parameters of the R&D tax credit so that the incremental nature of innovation and new product development in the food and drink sector should be brought into scope of the credit.
• Introducing a €5 million reformulation fund for the sector.

The Budget submission also makes several recommendations to support the continuing sustainability journey of the sector and to ensure a balanced and proportionate approach to consumption taxes.

ENDS