* Government's "Brexit-proof" budget criticised by business
* Brexit forces closure of mushroom farms, more jobs at risk
* Other exporters reeling from dive in value of sterling
* Thousands of jobs seen at risk without further action
By Padraic Halpin
WALDERSTOWN, Ireland, Oct 14 Ireland's mushroom
industry provides a stark warning to the rest of the country's
economy about the damage a sustained weakness in sterling could
inflict on Irish exporters, the sector most vulnerable to the
impact of Brexit.
Mushroom growers rely on the United Kingdom for 80 percent
of sales and have been losing money since Britain's vote to quit
the European Union in June sent sterling tumbling. It has now
lost 19 percent 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.
Producers had been pinning hopes on the government'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.
"We feel like we were ignored," said Kevin Reilly, 34, who
gave up a career in construction and finance six years ago to
help run his family's mushroom farm that employs 70 people in
the rural midlands of Ireland.
"We're not looking to be propped up indefinitely but we
needed some help in the short term and when you hear of another
farmer, someone you know well, closing down, it really hits
home. It's a worrying time and lots of jobs are at risk."
Ireland is widely seen as the EU economy with most to lose
from Brexit and the government, 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
"I don't know what planet they (the government) are on.
There was just dismay among our members who were asking where
was this Brexit budget," said Simon McKeever, chief executive of
the Irish Exporters Association.
McKeever said exporters, who, excluding Irish-based foreign
multinationals, ship 44 percent of their products to Britain,
were also starting to encounter some issues accessing credit
from banks concerned over their currency exposure.
Some firms with a high proportion of sales in Britain are
also considering shifting production there, a prospect McKeever
said was more likely after the Irish budget failed to reduce
income and capital gains taxes closer to UK rates.
"We're not really making it very attractive for them to stay
and what kind of implications will that have for jobs?" he said.
Ireland's mushroom industry, the fifth largest in the EU,
has an annual production worth only about 120 million euros, a
tiny proportion of the country's 243 billion euro 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 euros 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 percent of some cheese products.
In a Brexit analysis accompanying the budget, the finance
ministry said the most exposed sectors are largely based in
rural areas yet to benefit fully from Ireland's economic
recovery and where, in some cases, unemployment is still above
10 percent, compared to the 7.9 percent national average.
It expressed "particular concern" that employment-heavy
industries with high UK exposure such as the food and beverage
sector employs 80 percent of its 40,000-strong workforce outside
Dublin. The total Irish workforce is about two million.
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.
"That's a cop-out," said Leslie Codd of Codd Mushrooms, one
of only a handful of farms servicing the domestic market.
"If they are waiting to see what kind of deal the UK gets,
that's not really relevant if exporters are already closed down.
The lack of breathing space given in the budget is going to
speed up and increase mass closures in our sector. It's quite
likely we could lose 50 percent of producers."
The Irish Business and Employers Confederation (IBEC) said
the government 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.
IBEC also called for the reactivation of a fund set up
during the 2008 financial crisis that offered up to 500,000
euros to viable companies facing exceptional difficulties.
Without further action, thousands of jobs are at risk, it said.
"It's safe to say the sheep got much more out of the budget
than businesses impacted by Brexit," said IBEC policy chief
Fergal O'Brien, referring to a 25 million euro scheme set up for
the sheep sector.
"They're really going to have to come back to Brexit again.
At an exchange rate of over 90 pence (to the euro), Irish
businesses are well past the point of pain. The Department of
Finance mightn't have seen that yet, but business definitely
has," he said.
(Reporting by Padraic Halpin; Editing by Gareth Jones)