Collapsing mushroom sector exposes flaws in Ireland’s Brexit response

The country’s mushroom industry provides a stark waing to the rest of the economy about the damage a sustained weakness in sterling could inflict on Irish exporters, the sector most vulnerable to the impact of Brexit. Irish mushroom growers rely on the UK for 80% of sales. The industry has been losing money since Britain’s vote to quit the European Union in June sent sterling tumbling. Sterling has now lost 19% of its value against the euro, wiping out the Irish producers’ profit margins. Five of Ireland’s 60 mushroom farms have so far gone out of business since the referendum, including two this week (e.g.: McDonald Mushrooms, Golden Vale Mushrooms, Gorman Mushrooms, etc). Producers had been pinning hopes on the Govement’s much-awaited “Brexit-proof” 2017 draft budget unveiled on Tuesday, but have now joined business groups and the opposition in criticising it as inadequate.

Ireland is widely seen as the EU economy with most to lose from Brexit and the Govement, having cut its economic growth forecasts for 2016 and 2017 as a result of the UK vote, had promised a range of measures to protect the firms most exposed. Mushroom farmers had called for a reduction in the level of social insurance tax levied on employers, a ditching of plans to increase the national minimum wage and the provision of emergency funds to exporters. Instead they and other agri-food firms were offered cheaper loans and other small tax relief measures which the head of the Irish Creamery Milk Suppliers Association likened to “giving someone a bicycle when they needed something with a motorised engine”.

The Irish mushroom industry, the fifth largest in the EU, produce around 70,000 t of mushrooms, has an annual production worth only about €120m, a tiny proportion of Ireland’s €243 billion gross domestic product, and employs about 3,500 workers. But its plight mirrors many other sectors struggling with the fallout from Brexit.

Bilateral trade between Ireland and the UK totals some €1.2 billion every week and employs some 400,000 people on both sides of the Irish Sea. The UK accounts for almost half of all Irish boneless beef exports and close to 60% of some cheese products. Finance Minister Michael Noonan said the budget measures would likely not be the last aimed at cushioning the impact of Brexit. However, he added he could not do more to “to counteract unknown consequences” until the shape of Britain’s exit negotiations became clearer next year. Ibec said the Govement still had a number of options, including the provision of far more funding for firms breaking into new markets and a partial state guarantee of their credit exposure to suppliers, as is available in many other countries.

Source: RTE.IE