Food Drink Ireland Is Calling on Government to Act on Energy Costs in Budget 2027 - What It Means for Food Manufacturers
Food Drink Ireland have they submitted their recommendations for Budget 2027
Food Drink Ireland, the Ibec group representing Ireland's food and drink manufacturing sector, has submitted its Budget 2027 recommendations to Government. The submission covers a wide range of priorities from capital investment and innovation to workforce costs and market diversification. But one theme runs through it with particular urgency: energy costs.
With 57% of food and drink manufacturers identifying energy as a major challenge, the submission makes three specific recommendations to Government on energy:
Reduce policy-related fixed costs on electricity bills through direct Exchequer subvention of key charges including the Transmission Use of System charge and the PSO levy.
Prepare ready-to-go emergency energy supports for businesses impacted by sharp price spikes, taking advantage of the EU's proposed relaxation of state aid rules and the new Temporary Crisis Framework.
Extend the diesel rebate scheme to cover company-owned fleets, on-site plant and machinery.
What the data shows
Ireland's food and drink manufacturing sector is the country's largest indigenous industry. It employs almost 60,000 people directly, generates exports valued at €19 billion and has an extensive regional footprint that makes it central to rural Ireland. It is also a sector under serious cost pressure right now, and energy sits at the heart of that pressure.
Food Drink Ireland's Food and Drink Manufacturing Report 2027 paints a clear picture of where the sector stands. Wage growth is the primary concern, with 79% of businesses expecting costs to increase. But energy is not far behind, cited by 57% of respondents as one of the three major challenges facing the sector alongside attracting and retaining a quality workforce and the availability of housing for employees.
That is a significant number. More than half of businesses in the sector are flagging energy as a major operational challenge at a time when improving profitability is already the single greatest business priority for 2026. The two pressures are directly connected. When energy costs are high and unpredictable, margin is the first thing that suffers.
Recommendation 1: Reduce policy-related fixed costs on electricity bills
The submission is clear that Ireland has a unique opportunity to make its energy system an enabler of sustainable economic growth rather than a barrier to competitiveness. The benefits of the energy transition will take time to materialise, and in the meantime Ireland remains a high-cost location for energy.
The recommended short-term fix is a strategic annual subvention of key policy-related fixed costs on electricity bills, specifically the costs for temporary emergency generation within the Transmission Use of System charge and the PSO levy. These are costs that Irish businesses pay that their European competitors often do not. They represent a structural competitiveness disadvantage that Government has the direct ability to address, and Food Drink Ireland is making the case clearly that it should.
Recommendation 2: Prepare emergency energy supports in advance
The EU has proposed a relaxation of state aid rules and the introduction of a new Temporary Crisis Framework. Food Drink Ireland is calling on Government to take advantage of these changes and design new supports, with industry input, that can be activated quickly if energy prices rise sharply again.
The lesson of the energy crisis of recent years is that businesses need certainty that support is available and accessible when conditions deteriorate rapidly. Designing those mechanisms in advance rather than scrambling to respond is the right approach and the submission makes a strong case for Ireland to be ready rather than reactive.
Recommendation 3: Extend the diesel rebate scheme
For food manufacturers operating large-scale production facilities with significant on-site energy and fuel demands, the extension of the diesel rebate scheme to cover company-owned fleets, on-site plant and machinery is a practical and targeted measure that would reduce operating costs directly. It is a straightforward intervention that would have an immediate impact for many businesses in the sector.
Energy costs for food manufacturers is getting worse
Why this matters for food manufacturers
The submission frames the energy cost challenge in the context of a broader structural issue. Ireland's capital investment per employee is significantly lower than European peer benchmarks. The shift to low-carbon operations places unprecedented demands on companies, particularly because sustainability upgrades typically offer limited or zero traditional return on investment in the short term. Without targeted state intervention, the sector risks underinvesting in the green and digital transitions it needs to remain competitive.
That is the bigger picture. But for individual food manufacturers managing day-to-day operational costs, the immediate pressure is real and it is felt on every energy bill. Reducing the policy-related fixed cost component of those bills would provide direct, meaningful relief at a time when margins are tight and investment decisions are being deferred.
What food manufacturers can do now
Budget 2027 is still months away and policy decisions take time to implement even after they are announced. The energy cost challenge for food manufacturers is a today problem, not just a future one.
The most effective thing a food manufacturer can do in the current environment is get a clear picture of where their energy is going and what is driving their costs. Many businesses in the sector are paying more than they need to because no one has ever taken a structured look at their energy use. That is where an energy audit becomes valuable, and depending on your annual energy spend, there may be funded support available through the SEAI or your Local Enterprise Office to cover the cost.
If it is something you would find useful to explore, the team at Watt Footprint is happy to have that conversation.
