Government plans put food industry investment under pressure

The food industry faces another increase in costs, according to FNLI. Government plans introduce additional taxes, levies and new regulations. The trade association says this reduces room for essential investment. FNLI also expects higher production costs to increase grocery prices.

The plans come during a period of international uncertainty. Companies already face high costs for energy and raw materials. Labour, logistics and packaging are also taking larger shares of budgets. Several national charges will add further pressure. FNLI points to the proposed broad sugar tax. A consumption tax on non-alcoholic drinks is already in place. Excise duties on alcoholic drinks are also increasing. The reduced excise rate for small breweries will also disappear. Costs for water, gas and electricity networks continue to rise. New advertising restrictions also create additional regulatory pressure, according to FNLI. The announced ban on temporary workers affects the meat sector. FNLI says other parties in the supply chain will also feel the effects.

Less room for investment

According to FNLI, these measures conflict with the government's ambitions. A resilient food system requires companies to make long-term investments. These include sustainable production, food safety and health initiatives. Circular packaging and digitalisation will also require investment in coming years. Companies must also develop stable and reliable supply chains. FNLI says this reduces vulnerability to international disruption. However, the organisation argues that new charges restrict these investment opportunities. The government also expects supply-chain partners to support agricultural sustainability. FNLI says the practical and financial consequences remain insufficiently clear.

Higher costs could affect consumers

New taxes and levies increase production costs, according to FNLI. The organisation expects these costs to feed into grocery prices. Households spending relatively more on groceries could feel this particularly strongly. FNLI also warns that more consumers could shop across the border. This could affect businesses and jobs in Dutch border regions. Director Cees-Jan Adema is therefore calling for coherent, workable policies. He says companies need to remain able to invest and compete. This would help them respond more effectively to international disruption. Climate risks and digital threats also require continued investment, according to FNLI.

FNLI represents around 500 processing companies and seventeen trade associations. The organisation will continue discussing implementation with the Dutch government.

Source: FNLI